Canada Has a Money Laundering Problem It's Pledging to Fix

(Bloomberg) -- It’s long been known as “snow washing” -- dirty money circulated through Canada’s seemingly upright economy to emerge as pristine as the white cape blanketing the Rockies.

Prime Minister Justin Trudeau’s government is now acknowledging the problem and pledging to try and fix it.

“This issue was identified as a real priority -- it has become a priority for my government,” Bill Blair, Canada’s federal minister for organized crime reduction, said Wednesday in Victoria, the capital of British Columbia. “We recognize and acknowledge the impact that this criminal activity -- money laundering -- has had on British Columbia, on the affordability of housing, and on the integrity of our financial institutions.”

The Pacific Coast province has been at the center of a raging controversy after Vancouver-area casinos were found to have allowed millions of dollars in suspicious cash drops for years. An initial investigation commissioned by the government concluded at least C$100 million ($75 million) had flowed through casinos that served as "laundromats" for criminal organizations.

A widely anticipated follow-up to that -- a report examining how dirty money may have flowed into real estate, luxury cars and horse racing -- will be submitted by the end of this week to the government, British Columbia Attorney General David Eby said in a joint news conference with Blair. Eby didn’t commit to when it would become publicly available.

That report will play a “key piece” in British Columbia Premier John Horgan’s decision on whether to pursue a public inquiry into money laundering, Eby said. British Columbians want an inquiry, he said. “What they’re asking for, frankly, is to identify if there’s rot in the system.”

Trudeau’s federal budget tabled last week proposed to spend more than C$190 million on measures to tackle money laundering and tax evasion. It also proposed legislative amendments to make it easier to identify the beneficiary owners of private companies, often used to hold property anonymously, and to also make it easier to prosecute individuals believed to be handling suspicious funds.

British Columbia would be a “priority for the dedication” of those new resources, Blair said.

One of the biggest money laundering investigations in Canadian history, involving suspected drug money circulating in Vancouver-area casinos, collapsed last November after federal prosecutors concluded there wasn’t a reasonable prospect of conviction.

The Pacific Coast province has earned “an international reputation for being a center for money laundering,” Eby said. “What we need to do is close the loopholes and ensure that we’re addressing the systematic issues that are leading to a lack of prosecution, a lack of convictions.”

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