Auditor General Says Money Laundering is Still Going Hard in Ontario Casinos

Ontario’s Auditor General, Bonnie Lysyk, recently released her annual report, causing a political backlash from government officials being called out on mismanagement, lack of proper oversight, misuse of taxpayer dollars, and much more.

It seems that some years, this audit of the provincial government truly shocks Canadians with scandal, but this year, it was more or less a continuation of information that has been circulating for quite some time. Despite the severity of some of the report’s findings, there was little shock or surprise by the news media and constituents.

The Ontario Auditor General’s Annual Report

The Ontario AG’s annual report found 13 value-for-money audits and one review that were mentioned after its release. The report can really be boiled down to the 4-C’s: cannabis, condominiums, casinos, and coffins.

The official government watchdog expressed her concerns about many issues, including regulation of casinos, marijuana, the funeral industry, and mismanagement by the Condominium Authority of Ontario. The annual update came less than two weeks after Lysyk released a special report that was essentially a scathing review of the province’s pandemic response.

The most concerning issues outlined in the report were the abuses perpetrated by the Alcohol and Gaming Commission of Ontario, which regulates alcoholic beverages, private cannabis retailers, and gambling. These included problems surrounding the illegal sale of cannabis and the ongoing concerns over money laundering in the Ontario casino sector.

Money laundering in Ontario casinos

Describing the situation as a “major risk” to Ontario’s citizenry, the Auditor General, Bonnie Lysyk, cited poor enforcement by the provincial regulator and the Ontario Provincial Police and “that the AGCO does not produce audited financial statements, required of all government organizations to demonstrate transparency and accountability”.

The audit report looked at casino activity between 2017 and 2019 and found that during that time, the Alcohol and Gaming Commission was alerted by casinos about nearly 10,000 suspicious transactions.

Worryingly, these suspicious transactions were believed to have ties to money laundering or terrorist financing and totalled over $340 million. During the audit period, 67 official Ontario Provincial Police were operating, assigned to oversee casino activity and ensure gaming integrity.

Yet, despite 10,000 transactions being flagged, the Ontario Provincial Police investigated very few instances and only laid charges in 23 of the cases.

One of the most egregious examples of regulatory negligence was at the Niagara Fallsview Casino Resort in 2019 alone, where 862 questionable transactions took place totalling $136 million.

The next example cited in the report concerned a gambler who worked as a cook and borrowed money from family, who somehow spent $1.3 million over three years in Ontario casinos. Even after questioning by police, he was never formally investigated and was allowed to continue gambling.

In the same vein, the investigation found that only 2% of individuals accused of suspicious transactions were actually barred from reentering an Ontario casino during these two years.

Recommendations for reform

When faced with the auditor’s criticisms, the Ontario Provincial Police cited issues hampering them from properly laying money-laundering charges on perpetrators. The difficulty arises when, in order to acquire sufficient evidence to proceed with charges, the officers would have to gather evidence from outside the casino itself, potentially costing the department (and taxpayers) substantially more money.

The auditor did offer some useful common-sense recommendations to help prevent future issues of this nature. The first of which is for the Ontario Provincial Police to better monitor the gamblers coming and going from local casinos. Lysyk believes that visitors to the casino should be prohibited from entry if they were found to be carrying large amounts of cash with no proof of funds.

The other suggestions included amping up the availability of investigative tools to root out money laundering as well as employing enhanced verification systems to determine the source of questionable funds.

The tip of the iceberg

It’s no surprise that in recent times, many people have sought online entertainment during lockdown periods and months of social distancing. With the Covid-19 pandemic changing so many aspects of the economy and travel especially, it’s no wonder that casino fans would have turned to offshore online casinos to enjoy their favourite pastime.

If Ontario’s experience with money laundering in its brick and mortar casino teaches us anything, it’s that money laundering in land-based casinos might just be the tip of the iceberg. Considering the enormous amounts of money that are being traded, the chances of illicit financial activity are huge.

According to recent statistics, the current size of the online casino market is almost 59 billion U.S. dollars and forecasted to nearly double in the next two years. Predictions place the value of the global online casino market at 92.9 billion U.S. dollars by 2023. That kind of money changing hands certainly has the potential for trouble.