Ontario Considered Susceptible to Money Laundering Activities after Damning Report Published

Money laundering, or finding ways to make large sums of money generated through criminal activity look legitimate, has long been associated with casinos and the gambling industry. A common form of money laundering via casinos was to traditionally buy chips from a casino with a casino and to receive the funds from those chips returned by the casino through another payment method entirely. In many cases, criminals could do this without playing their hand at all or placing minimal bets.

In many economies across the world, casinos have now become subject to strict anti-money laundering rulings. However, upholding such rules can prove tricky for the establishments as they don’t want to scare off any potential customers. Naturally, even players who’ve earnt their money legitimately may not be eager to divulge how much they want to gamble. Without effective anti-money laundering legislation, however, casinos can easily be sucked into the underground economy, especially if they become willing to turn a blind eye and fail to carry out adequate checks on their customers.

With the growth of online gambling and the lack of regulation that comes with operating on the internet, concerns surrounding unscrupulous activities linked to gambling have resurfaced. Governments across the globe have also been seen to acknowledge the value of investigating the issue and finding nuanced ways to tackle the problem without hampering the revenue-generating potential of the gambling industry. As is evident in the Canadian context with the recent release of the Cullen report in British Colombia, which has understandably caused much disruption in the gambling circles of Ontario.

The Cullen Report

In June 2022, Commissioner Austen Cullen dropped a bombshell report which demonstrated how large sums of cash were being laundered via provincial casinos in British Colombia. The 1800-page report was the result of a three-year investigation carried out by the province authorizes that unearthed the astounding amount of dirty money that was laundered through local casinos in the decade between 2008-2018.

The publication of the Cullen Report has certainly been shocking and looks likely to have a profound impact on the whole of Canada’s casino industry. The regulators in Ontario have taken steps to crack down on any venue that fails to fall in line with the anti-money laundering policies set by the provincial authorities.

It’s worth highlighting the fact that Ontario launched its regulated online gambling and sports betting sector on April 4th of this year. Interestingly, the removal of physical cash will substantially reduce the liability of money laundering. This possibly explains the sudden surge in new CA no deposit casinos being granted their licenses in various provinces across Canadian borders.

Furthermore, just over a month after the publication of the Cullen reports findings, the Alcohol and Gaming Commission of Ontario dished out financial penalties amounting to CAS 227,250 to HR Ottawa LP, the body responsible for daily operations of the Ontario Lottery Gaming Slots at Rideau Carleton Raceway, for 36 violations that emerged from an audit.

Why The Port Cities Are Attractive To Money Launderers

As a country that is governed regionally, the lack of a cohesive countrywide approach to tackling money laundering and associated activities is often cited as part of the reason these problems have become so prevalent.

With regards to why money launderers find the Port Cities particularly attractive for their criminal pursuits is first the size of Ontario’s economy, which makes it highly vulnerable. According to international expert Matt McGuire, the fact that less than 1% of outgoing containers were inspected also added to the issues. He also stressed that it wasn’t just the financial centers such as Toronto, Vancouver and Montreal that were at risk from money launderers but border towns too. 

How Online Gambling Can Be Use To Lower Risk

Despite the fact the advent of online gambling portals disrupted the world of land-based casinos quite markedly, there are also positive implications of this development too. For instance, through Ontario’s attempts to regulate the online gaming and sports betting space and the removal of physical cash as a method of payment, money launderers would struggle to gain easy access to this area. Unlike land-based casinos, where it is relatively easy to stay anonymous, legitimate online casinos have tools in place to accurately identify all their clients and monitor their transactions across the site.

Final Thoughts

To conclude, we’ve always known that there has been a close linkage between the gambling space and money laundering. However, the extent of this connection in the Canadian context has been highlighted dramatically by the findings of the Cullen Report.

While the rapid expansion of online gambling sites has certainly provided several challenges for those trying to regulate gambling, there are also lessons to be learnt from this technologically savvy space.

The removal of cash as a method of payment is certainly a great step in the right direction and possibly one which can be adopted by land-based casinos too. Likewise, technology needs to be used strategically in order to capture the information of clients in ways that allow the authorities to track suspicious activities without infringing on the privacy of legitimate gamblers out there.

Ultimately, the Cullen report has served to open the eyes of policymakers to the extent of money-laundering activities across the country. It is now time to take action to come down hard on money laundering in order to ensure that the gambling industry remains safe for everyone else.

Huynh Nguyen

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