Government toddy managers are too busy to count potentially dirty money

Bob Mackin

B.C. government liquor store managers were too busy last November during the annual premium spirits promotion to report potential money laundering to corporate headquarters as they had been.

Last November 13, the Premium Spirit Release offered a $200,000 Dalmore Decades No. 4 Collector’s Set, a $38,000 bottle of GlenDronach 50 Year Old, and many other rare and expensive potent drinks for sale.

Blain Lawson, CEO of BC Liquor Stores (LDB)

In a Nov. 12 email, obtained through the Freedom of Information Act, the director of store operations for the Liquor Distribution Branch (LDB) told managers at three stores in Vancouver, West Vancouver and Richmond that all cash transactions over $10,000 must be certified and documented by the custodial manager. Under provincial policy, BC Liquor Stores had no limit on the amount of cash they accepted.

Jonathan Castaneto has directed the managers of the Cambie and 39th outlets in Vancouver, the Park Royal outlet in North Vancouver and the Brighouse outlet in Richmond to email the executive director of business services if and when of processing a large cash transaction during the November 13 promotion.

“With the upcoming Spirit Release and the holiday season, stores could be faced with large cash transactions,” Castaneto warned. “Please note that in accordance with the Large Cash Transactions Policy, all cash transactions over $10,000 (or a group of sequential transactions from the same client totaling over $10,000 in cash) should be counted twice. times: first, in front of the customer and then, immediately after the conclusion of the sale, in the cash register.

But the plan fizzled.

Three suspicious transactions under $10,000 were being investigated, according to a November 16 censored briefing note from LDB CEO Blain Lawson to Finance Minister Selina Robinson.

(BCLDB)“On Monday morning, it was discovered that the real-time alert notification process had not been followed during the event,” Lawson’s briefing note said. “Store managers explained that they were busy with the Premium Spirit version and assumed they could update on Monday if they followed the established policy process.”

A day later, on November 17, Deputy Minister Doug Scott sent a memo to Lawson to immediately bar all cash transactions over $5,000 upon review by the Crown Agencies Secretariat. Scott cited “several large transactions over $10,000.”

Details of suspicious transactions have been withheld by LDB. Lawson did not respond for comment.

A statement from the LDB says the agency continues to review the policy and intends to make permanent changes to strengthen the policy.

According to the briefing note to Robinson, in 2018 the LDB explored reporting large cash transactions to the Financial Transactions and Reports Analysis Center (FINTRAC). However, the LDB’s Information and Privacy and Privacy Departments “advised at that time that there was no clear legal authority for the LDB to lawfully collect and disclose information that FINTRAC requires from designated reporting entities”.

Trade-based money laundering expert John Zdanowicz, who testified in December 2020 before the Cullen Commission on Money Laundering in British Columbia, said governments can print money, but that ‘they can’t make extra bottles of rare wine or liquor.

“There would be rational reasons to buy these things as investment, consumption and inflation hedges, but they can also be used to launder money,” Zdanowicz said in an interview.

He said criminals use alcohol to disguise the proceeds of crime by under-invoicing or over-invoicing.

Trade-Based Money Laundering Expert John Zdanowicz (MVCC)

“IIt’s selling something for nothing, or buying nothing for something,” said Zdanowicz, professor emeritus at Florida International University. “Selling a bottle of rare bourbon that’s worth $15,000 and then charging $5 for it is a way to get the money out of the country because once it’s in the foreign country it can be resold to its owner. true market value. You do the exact opposite, if you want to bring money into the country, you overvalue your exports and you sell something that is only worth 50 cents, you sell it for 500 dollars.

Zdanowicz analysis of 2019 Statistics Canada trade figures found C$90 billion of all types of goods left Canada and C$44.4 billion entered. The United States, China, Germany, Mexico and Japan were the top five countries in dollar terms.

Zdanowicz’s trade analysis for the same year found that $16.5 billion was moved into BC and $8.5 billion was moved out of BC through price manipulation.

The NDP government has long known that BC Liquor Stores was at risk of money laundering.

In May 2015, a site manager at Cambie and 39th Vancouver contacted head office after workers became concerned about large suspicious transactions over $10,000. A senior LDB investigator told workers to report their concerns to management, not the police or FINTRAC, according to an email leaked to the then-opposing NDP.

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