B.C. casino patron brought $1.8M in cash to casino in just 7 days, inquiry hears

The B.C. Lottery Corporation's one-time director of anti-money laundering and investigations faced a grilling from a government lawyer Friday over the lack of action on suspicious cash transactions at the River Rock Casino.

A week of buy-ins by a single customer in December 2014 was a major focus of questions directed at John Karlovcec by Kaitlyn Chewka, a lawyer for B.C.'s Gaming Policy and Enforcement Branch (GPEB), during proceedings of a public inquiry on money laundering in this province.

Chewka read from a Dec. 30, 2014 email written by Karlovcec, in which he noted that a patron who'd recently made several large cash buy-ins at the River Rock had appeared once again with $360,000 in cash.

"This patron brought in $1.8 million into the River Rock casino, largely in small bills, over the course of seven days … You'd agree with me that these types of transactions are suspicious?" Chewka asked Karlovcec.

He agreed that was true, and said those transactions would have been reported to GPEB and police, along with Fintrac, Canada's financial transactions reporting centre.

But Chewka pointed out that BCLC's role in addressing suspected money laundering involves more than just reporting unusual transactions. The corporation oversees gambling in B.C. and has the power to direct casinos to take action in situations like this.

"Despite being aware of this issue as early as Dec. 26, 2014 … BCLC did not direct the service provider to refuse the cash?" Chewka asked.

"BCLC did not direct the service provider to require the patron to source the funds?"

Karlovcec said the patron in question would have been placed under investigation, but compelling the casino to take further action wasn't within his authority.

Chewka pointed out that in Karlovcec's emails addressing the transactions, he'd written, "I recognize that we do not want to jeopardize revenue."

But Karlovcec testified that he was under no pressure to prioritize casino revenue at the time.

Friction between agencies

The Cullen Commission of Inquiry into Money Laundering in B.C. was launched by the government after reports that illegal cash was helping to fuel the real estate, luxury car and gambling sectors in the province.

Karlovcec's testimony on Friday also hinted at some friction between investigators at BCLC and their counterparts at GPEB, in the police and among casino staff when it came to taking action on money laundering.

Karlovcec testified about how, in 2014, his team created profiles of the top 10 suspected "cash facilitators" — or loan sharks — operating out of the River Rock at the time.

Those profiles, which included identifying details, photos and a list of known associates, were all provided to the anti-gang Combined Forces Special Enforcement Unit, and Karlovcec said he believed they would be used to open criminal investigations.

"But I don't think they actually did," he told the inquiry. "I think there were other tactical priorities for their group."

Karlovcec also suggested that investigators at BCLC were often left in the dark when it came to the work going on at GPEB.

"It was like pulling teeth at times. Certainly we didn't get a lot of information from them," he told the inquiry.

Meanwhile, Karlovcec has said he had a good working relationship with compliance officers at the River Rock, but emails read for the commission suggest there were situations where higher-ups at the casino bristled about BCLC investigators approaching high-rollers.

In one of those emails, Great Canadian Gaming Corp.'s then-vice-president of corporate security and compliance, Patrick Ennis, suggested that investigators "could be a bit more polished" about speaking with VIPs in a high stakes room about large cash buy-ins at the River Rock.

The commission is set to resume hearings on Monday morning.