Vaughn Palmer: Cullen report makes it clear BC can’t wait for Ottawa to move on money laundering

Opinion: The Cullen inquiry touched only lightly on federal efforts to end money-laundering for jurisdictional reasons, but made it clear Ottawa has failed BC

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VICTORIA — When Attorney General David Eby responded to the report of the money-laundering inquiry this week, he, of course, welcomed its negative verdict on the previous BC Liberal government.

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But Eby spent as much time and energy highlighting what Commissioner Austin Cullen said about the failings of the federal government’s efforts to fight money laundering.

“It is impossible to read this report without coming to two understandings,” Eby told reporters after the release of the money-laundering report Wednesday.

“One is that the support we hoped for from federal enforcement bodies has not been there in British Columbia… what we relied on and hoped for was not realized.

“The second is that even recent announcements from the federal government… have already essentially collapsed.”

In light of those twin failings, Eby said during an interview with Stephen Quinn on CBC’s Early Edition, that he found the report “a bit heartbreaking.”

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The BC attorney general was especially dismayed at the apparent collapse of federal efforts to deal with trade-based money laundering.

The trade-based variation is one of the largest and most pervasive types of money laundering in the world, accounting for hundreds of millions of dollars in corrupt transactions every year in Canada alone, according to Cullen.

“It refers to the process of disguising illicit funds and moving value between jurisdictions through international trade transactions,” Cullen wrote. “Complicit sellers and buyers in different jurisdictions use a variety of techniques to misrepresent the price, value, quantity, or quality of imports or exports.

“British Columbia is particularly vulnerable because of its international shipping ports, large volume of international trade, and stable, accessible financial system. Trade-based money laundering can hide in plain sight.”

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Eby recalled how back in 2018, the federal government committed to the creation of a working group to tackle trade-based money laundering.

“This was a big focus of the federal government,” Eby told reporters. “Although the public was concerned about retail-level money laundering at casinos, trade-based money laundering was a much bigger issue, and that’s why they were going after it.

“To read in this report that the working group on trade-based money laundering has essentially collapsed due to reasons that are inexplicable to me — apparently, the key person is no longer with the RCMP, was the explanation that was provided by the commissioner — is an indication that this is not receiving priority attention from the federal government.”

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Notwithstanding his disappointment, Eby hopes that the Cullen report will provide the basis for a fresh start with Ottawa.

“There’s a new minister,” I noted Thursday during an interview with Simi Sara on CKNW radio.

Marco Mendicino, a former crown prosecutor specializing in organized crime, was appointed public safety minister after the 2021 federal election.

“My hope is that he will look at this with fresh eyes, that he will feel embarrassed as we all should as Canadians about the state of our anti-money-laundering framework nationally, and that he will have the support of the prime minister and the federal cabinet in addressing this issue once and for all.”

Eby has to hope.

But when the BC government was setting up the public inquiry into money laundering three years ago, it invited Ottawa to make it a joint federal-provincial commission.

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The federal government said “no thanks,” doubtless realizing that the findings were not likely to reflect well on its efforts.

While federal agencies co-operated in the provincial inquiry — grudgingly in some instances — there remained an unresolved jurisdictional issue that Cullen himself acknowledged.

“I’m really constrained in what I can say about federal agencies in my report because I am a provincially appointed commissioner,” he told reporters this week.

“I have looked at the federal response to money laundering in British Columbia to identify some of the gaps, in order to make recommendations as to what I think are necessary to fill those gaps.

“I don’t want to get too much into parsing the responses of federal agencies. I have to be very cautious about that.”

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Inquiry Commissioner Austin Cullen.
Inquiry Commissioner Austin Cullen. Photo by Rich Lam /The Canadian Press

Still, as Eby noted, Cullen managed to “provide some very useful findings for the federal government as well as some really helpful recommendations about what we can do in BC”

Whether the federal government, jealously protective of its jurisdiction and unwelcoming of criticism from mere provinces, will see it that way remains to be seen.

In any event says Eby, BC won’t wait on Ottawa to act.

“I agree with the commissioner’s implicit unstated conclusion that the province can no longer rely on, or wait for, federal responses to address this problem and we must take on a stronger role related to enforcement around previously exclusively federal responsibilities.”

The province will proceed on its own in a number of areas including gathering intelligence, investigations and enforcement, oversight and reporting progress to the public.

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Drawing on Cullen’s findings, Eby believes the province has sufficient jurisdictional leeway to act unilaterally.

“Constitutionally, we can have overlapping provincial licensing and regulatory authority in a number of areas,” said Eby.

“The commission’s report finds a number of areas like this where we can overlap and complement federal regulatory systems that are not working for our province.”

Sounds expensive, time-consuming, duplicative and fraught with jurisdictional risks.

But the federal government and its agencies have repeatedly failed short in fighting money laundering in BC and the Cullen report provides no basis for assuming that will change.

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