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Analysis: Why are B.C. money laundering investigations failing to produce charges?

B.C. Premier David Eby says British Columbians are likely 'shocked' to see that evidence of massive amounts of suspicious cash moving through B.C. casinos cannot produce a single charge of money laundering
The Cullen inquiry into money laundering in B.C. heard from former RCMP senior operations officer and transnational organized crime investigator Calvin Chrustie, bottom right, in May, 2021.

The announcement of a second major money laundering investigation in B.C. drawing dead at the prosecutor's table was no surprise to former RCMP transnational crime investigator Calvin Chrustie, who views this province as a welcome mat for major criminal organizations due, in part, to Canadian criminal laws.

"The reason for the increase and rise and continual presence of the highest level [criminal organizations], like the Sinaloa Cartel, like The Company and Triads, like the Iranians (terrorist groups) and anyone else, is that from a risk-based analysis, these guys see no risk working here. Not because of the police, but because of the legal system," said Chrustie.

This week the B.C. Prosecution Service (BCPS) announced no charges would be forthcoming from the E-Nationalize money laundering investigation by the Combined Forces Special Enforcement Unit of British Columbia (CFSEU-BC).

The investigation looked into local casino gambling using so-called money service businesses — office venues where millions of dollars were stored and disbursed.

Chrustie testified at the Cullen Commission of Inquiry into Money Laundering in B.C. in May 2021, telling Commissioner Austin Cullen that Vancouver had become a "convergence" zone for Mexican cartels, Chinese triads and Iranian terrorist groups.

The failure of the legal system is even more apparent to him now than it was nearly two years ago, said Chrustie.

"There's no risk to them in terms of prosecution," Chrustie told Glacier Media in an interview following the BCPS announcement.

The first potential obstacle to the prosecution of alleged money launderer Paul King Jin, cited by special prosecutor Christopher Considine, was disclosure issues.

In Canada, said Chrustie, disclosure requirements are more onerous than in other democratic nations, particularly the United States.

E-Nationalize followed the failed E-Pirate investigation wherein a disclosure mistake occurred when an informant's identity was revealed to Jin's defence team. This time around, the substantial volume of disclosure required by CFSEU investigators posed a challenge, said Considine.

He noted that the investigation produced 41,877 documents, 90 seized smartphones, 77,643 logged calls, 15,117 unique chats, over 1.6 million chat messages, 4,458 emails and 22,048 text messages, mainly in Mandarin.

"Do you know how that works in Canada?" asked Chrustie rhetorically. "Not that well; not with all the different dialects and all the expertise; everybody's gonna say, 'What he meant was, 'X;' no what he meant was, 'Y;' no what he meant was, 'That.' It's never going to happen in Canada," said Chrustie.

Cullen recognized the testimony of Chrustie and others on this matter in his final report last June.

The root of the problem is two Supreme Court of Canada rulings that have established these stringent disclosure requirements, noted Cullen.

First, the Stinchcombe case requires the Crown to make full disclosure, to the accused, of all evidence needed to make a full answer and defence. Second, the Jordan case requires the Crown and the courts to get the matter to trial within strict time limits, Cullen noted.

Chrustie told Cullen that the disclosure requirements hamper international investigators tackling the cross-border drug trade and money laundering that passes through Canada.

And so, what do transnational criminals do? They funnel their business through Canada, said Chrustie.

To produce arrests in such cases, Chrustie said Canadian police are left to mostly track transnational criminals and when they leave Canada, police inform foreign authorities at their destination to handle arrests and prosecution.

"A file would come in, and I'd go, 'Hey, these Canadians are coming down to L.A., they're coming to pick up 150 kilos of coke," said Chrustie hypothetically.

"You, jump in a plane, get there today. … Let's do it—Bang, bang, bang. Twenty-four hours later, the people are arrested, bag tagged, in custody; two months later, in jail for 10 years, done. If I did it like E-Nationalize, that file went on ... at least seven, eight, nine years," said Chrustie.

Jeffrey Simser, a lawyer with the Ontario Public Service and an expert on money laundering, told the commission: "Disclosure requirements are punishing, they're massive, and the last thing that you want to do is two or three or four years into a major project on organized crime [is] discover whoops, in the first tranche we revealed three confidential informants in our disclosure to the defence lawyer, or whatever, because that will blow up the entire prosecution and the best you'll be able to do is maybe a civil forfeiture action."

Considine also noted that the E-Nationalize failed to produce a clear predicate offense or underlying crime.

Chrustie suggested that if the evidence were introduced in the United States, more weight would be given to a reasonable conclusion that the duffle bags of money — wrapped and known to have traces of drugs on them — were from drug trafficking.

Considine's clear statement to the BCPS stated that the CFSEU relied on the predicate offense of Jin using an unregistered money service business known as Silver International.

Considine expressed concern about perceived technical weaknesses in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).

"It is arguable that although the PCMLTFA criminalizes the failure to register, it does not criminalize the operation of a money service business in the absence of registration.

Considine concluded: "Regrettably, the challenge of proving a viable predicate offence, given the wording of the current legislation, combined with the complexity of an enormous data set in a foreign language, have conspired to make the prospects for conviction poor, despite the best efforts of many dedicated officers."

On Thursday, Premier David Eby — who directed the BCPS to appoint Considine in March 2022, then as Attorney General — said the federal government needs to amend the criminal code on several fronts to handle money laundering more adequately.

"Obviously, there's a serious problem with federal criminal law that allows this conduct to continue in this province," Eby told reporters.

"It's probably shocking to British Columbians that you can have somebody in our province accepting suitcases full of bundled bills, operating in an unlicensed, illegal so-called money service business, receiving the money clandestinely and that there is after teams of prosecutors have reviewed that conduct and there is no criminal charge that they can find, that they can proceed with," said Eby.

The premier added, "We can't wait for the federal government," in noting the provincial government will introduce unexplained wealth orders (UWO) as a provincial tool.

Such orders, Eby said, are "a significant expansion of the civil forfeiture of British Columbia" and "a direct response to cases like [E-Nationalize]."

Eby added, "there have been suggestions that the federal government needs to look at the American so-called Rico laws, talk about criminal organizations, and racketeering in the United States. What would a Canadian model have that look like? We hope that the federal government takes on these challenges."

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