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Wonder why the B.C. gambling regulator didn’t act a decade ago when some thought a tsunami of dirty money was beginning to swamp casinos?

The bureaucrat in charge of B.C.’s Gaming Policy and Enforcement Branch considered it a ripple — tens of millions, perhaps, but still less than one per cent of the casinos’ annual $6 billion rake.

“In relation to the total buy-in, I did believe it to be small,” Doug Scott told the Cullen commission into money-laundering, referring to suspicious cash. Scott, a deputy minister, was manager of the enforcement branch from 2011 to 2013.

“It wasn’t the fact that it was small that made me think we didn’t need to take action,” he said, referring to his response to the potential threat. “What informed me … was (it was) small relative to the $6 billion or so.”

Even though he believed some of the suspicious cash was the proceeds of crime, the former Mountie didn’t think the RCMP cared — as there had been no enforcement and no prosecution for money laundering or proceeds of crime and ta dedicated enforcement unit had been disbanded in 2009.

“I left there with my belief that there was no capacity in the RCMP specifically in financial crime or proceeds of crime that we would be able to garner the attention to have an investigation done,” the former Mountie explained. “I didn’t think there was a significant likelihood of getting their attention and … I didn’t think that was the proper allocation of effort to try and encourage police to investigate.”

His testimony was surreal, especially since Scott remained a key player — in 2018, he was named associate deputy minister responsible for both the gambling enforcement branch and the B.C. Lottery Corp., and was named to the committee with a mandate to oversee implementation of anti-money-laundering measures.

In Nov. 2020, he became deputy minister of Crown agencies secretariat in the Ministry of Finance with responsibility for among other organizations, the lottery corporation, often referred to as BCLC.

Scott was not enthusiastic about Mountie-turned-consultant Peter German’s dirty money report.

“It was not based on quantitative analysis … It was based primarily, as I understood it, on interviews with people in the industry. … I’m not trying to dance around … anecdotal? I don’t know if that’s the right term. It was largely not based on data, I agree with that.”

For his part, Scott in 2011 had a team of 30 investigators in the gambling enforcement branch — almost every one a former cop (like far too many in this debate) — but they worked 9-5 and refused to talk with gamblers because of “the potential danger.”

He said his executive director of investigations for the enforcement branch (Larry Vander Graaf, another ex Mountie) said: “They didn’t have the authority to do that and they didn’t have the equipment to do that, as well, he referenced that they were not equipped for dealing with those type of individuals.”

“I questioned the advice I was getting. I wouldn’t go so far as to say I absolutely believed that they had the authority. But what I didn’t understand is why they couldn’t ask the questions. It wasn’t conducting a money-laundering investigation.”

He never sought a legal opinion from the Attorney General’s lawyers or challenged Vander Graaf and his right hand, Joe Schalk (another former Mountie who was senior director of casino investigations for the enforcement branch).

Scott said the relationship between the gambling enforcement branch and BCLC, “which was not operating at a high-functioning level, in my view impaired our ability to effectively respond to money laundering.”

The enforcement branch’s 30 or so special provincial constables appear to have been sitting around on the public dime cutting-and-pasting reports from the casinos and BCLC, as one lawyer put it.

Scott asserted he was pressing at the time to have the BCLC’s paltry five investigators question players about their cash, though he had no supporting documentation.

He disagreed with imposing cash caps on how much a gambler could bring in or limiting use of specific currency denominations, such as $20 bills. He said nuanced solutions were needed.

“At the time, the issue we were dealing with, though the numbers were enormous and extremely distasteful to me, at the outset, it was still somewhere in the range I think of less than one per cent of buy-ins. … I felt that the application of a cash cap was too blunt an instrument because we had very specific suspicious cash coming in and it would impact all the other stakeholders related to gaming unnecessarily.”

Proposals to establish on-site enforcement, player interviews, and proactive interdiction also were not implemented.

“The strategy and the vast majority of all my actions in relation to AML (anti-money-laundering) were reflective of how I viewed the context of the time,” he said.

“There were a handful of contextual drivers that drove my thinking … the absence of police and prosecution. I believe this to be very important. … that had broken down. There was no effective law enforcement.”

And, we had “imperfect information on which to base our decisions. There were suggestions of a cash culture within casinos and within the local community with cash coming in from overseas that confused our ability to have clear visibility of our problem.”

The commission has heard it didn’t really change until 2015 when cash restrictions were placed on some players, a police investigation launched and BCLC’s interviewing of individuals about the source of their wealth and cash expanded.

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For a decade, however, there also has been a call — echoed by German — for a dedicated law-enforcement unit, but the government remains reluctant.

“We are waiting to get some guidance from this commission because it’s a very significant investment to make and we want to ensure it is in line with what this commission views after its extensive review of the issue as appropriate or not.”

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The Cullen commission hearings continue online.