(Bloomberg) -- A money laundering crackdown sparked by lavish bets at Vancouver gambling tables has a new target in sight: The Canadian city’s gleaming luxury dealerships where buyers can pay cash for $300,000 supercars.
“Going after money laundering is very much like whack-a-mole,” British Columbia Attorney General David Eby said in a phone interview Tuesday from Ottawa, where he’d traveled to plead for federal help in battling dirty money. “We can take the cash out of the casino, but it’s going somewhere else and we need to identify where and take action to address it.”
Eby has been spearheading an anti-money laundering drive by Premier John Horgan, who became leader of the Canadian province eight months ago. A 2016 report that the previous government hadn’t disclosed indicated large amounts of suspicious cash had been flowing through British Columbian casinos.
Eby said Tuesday that it’s likely illicit money has been fueling sales of luxury vehicles and boats, as well as Vancouver’s notoriously expensive property market.
“Vancouver has been described as the No. 1 supercar city in North America,” Eby told a finance committee in Ottawa earlier Tuesday. He defined a supercar as any vehicle costing more than C$150,000 ($115,000). “I would love for us to be tracking people buying supercars with cash.”
In December, the province imposed new rules on casinos requiring them to complete source-of-funds declarations for deposits of C$10,000 or more in cash. They were also prohibited from accepting cash from customers involved in two consecutive cash transactions until it was determined the source wasn’t suspicious or illegal.
Those appear to be having a dramatic effect.
On average, roughly C$5 million a month in suspicious cash was being flagged at B.C. casinos. “The money was walking in the front door,” Eby said. “People with shopping bags full of C$20 bills would walk it up to the cage.”
In February, following the new measures, suspicious cash transactions dropped to C$200,000, Eby said.
Asked if similar rules could be coming for car dealerships, Eby replied, “our provincial government will do everything possible to ensure that dirty money is not involved in our economy to the extent possible, whether it’s luxury cars, real estate, casinos or elsewhere.”
B.C. is pushing the federal government for a coordinated response to money laundering, arguing that provincial measures alone could simply push activity to other regions. Criminals could buy their luxury cars or set up opaque shell companies to buy property in another province.
The province hired Peter German, a former deputy police commissioner, to lead an independent investigation into money laundering in the gambling industry, and the final report is expected by March 31. Eby said German will continue with a second phase of the investigation focusing on the real estate sector.
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