Promise to regulate money services businesses follows collapse of major B.C. organized crime investigation

The alleged money laundering case had been one of the biggest organized crime investigations in B.C. history and was featured throughout the BC NDP government’s public inquiry into money laundering

By Bob Mackin | March 28, 2023, 

The federal government has pledged to fill a gap in Canada’s anti-money laundering laws, less than a month after a special prosecutor’s report cited existing laws as the reason why charges weren't brought against an alleged Richmond-based money launderer. 

But an anti-corruption watchdog says that improving the law on its own won’t be enough.

In Tuesday’s federal budget, the Liberal minority government revealed plans to amend the Criminal Code and Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Key measures include criminalizing unregistered money services businesses and requiring criminal record checks for currency dealers.

Weeks earlier on March 1, special prosecutor Chris Considine published statement that succinctly explained the main reason why he agreed with a B.C. Prosecution Service decision in late 2021 to not charge Paul King Jin for allegedly moving $2.4 million in dirty money during the first half of 2017.

“At present, the act criminalizes the failure to obtain a licence, but does not explicitly criminalize the operation of an unlicensed [money services business],” Considine wrote.

The Jin case had been one of the biggest organized crime investigations in B.C. history and was featured throughout the BC NDP government’s $19 million Cullen Commission public inquiry into money laundering.

Transparency International Canada executive director James Cohen said an amendment is better than a whole new legal structure, but, “as always, it comes down to enforcement.”

“Getting the resources there to the administrative bodies, and to law enforcement, so that we don't just have something nice on paper, but we have the actual capability to enforce it,” Cohen said. “That's really where this all comes down to, the rubber hitting the road.”

Cohen cautioned that the embarrassment of a case falling apart means there is also the risk of going too far in the other direction.

“So we always want to see any new tool used wisely. But, definitely let's plug the gaps that were being exploited.”

The federal government said it also plans to amend the Bank Act, the Insurance Companies Act, the Trust and Loan Companies Act and the Office of the Superintendent of Financial Institutions Act, improve intelligence sharing between law enforcement agencies, the Canada Revenue Agency and the Financial Transactions and Reports Analysis Centre (FINTRAC) and provide whistleblower protection to employees who report information to FINTRAC.

“Language is one thing you always want, you can’t take stern words as proof of something that's going to happen. But it definitely feels as if the ears are open for, and there's political will for, action,” he said. “So hopefully, this is an opportunity where the government's listened to experts and doing a thorough review of what needs to be done.”

Many of the topics in the five-page section of the 270-page annual financial blueprint were already canvassed during B.C.’s Cullen Commission. The federal government already committed in last year’s budget to a public, searchable beneficial ownership registry of federal corporations by the end of 2023. Another round of amendments to the Canada Business Corporations Act is required before that comes to fruition.

Cohen has campaigned for years for such a registry, which would be a key tool in combatting money laundering, tax evasion and terrorist financing in Canada.

Last year’s budget included $2 million for Public Safety Canada to establish a new Canada Financial Crimes Agency. Further details are coming this fall.

Meanwhile, the budget also includes $48.9 million over three years for the RCMP to beef up its investigations of foreign interference and $13.5 million over five years to open a National Counter-Foreign Interference Office under Public Safety Canada. Both moves are in reaction to recent leaks from reports by Canada’s spy agency about Chinese government meddling in Canada’s 2019 and 2021 federal elections and Vancouver’s 2022 civic election.

"There are implications of under the table money being given between intermediaries and politicians or even nominee for political office,” Cohen said.

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