A recent money laundering case at Fallsview Casino in Niagara Falls, Ontario, may point to a growing problem of suspicious transactions at casinos within the province, according to media reports.
CTV News notes that more than $350 million in these types of transactions were flagged in 2022. That total was almost $40 million higher than some of the higher reporting totals before the pandemic. Law enforcement agencies make note of these figures and warnings as criminal organizations often attempt to make use of casinos in money laundering efforts.
While that total may be a concern, the news service notes that “provincial gambling officials say the high number is a sign casino staff are rigorously reporting suspicious transactions.”
Details on the Investigation
The number of suspicious transactions came to light after a recent case involving Branavan Kanapathipilla. Ontario Provincial Police (OPP) are investigating the man for money laundering via Canadian casinos. Despite having previous convictions for fraud and other crimes, Kanapathipilla was able to make deposits and withdrawals of $4 million in cash at Toronto casinos for several years.
OPP officials reported that these transactions occurred without raising major red flags and triggering a larger investigation. Officials seized $100,000 in cash that was deposited in November at Fallsview after the transaction was reported by staff.
Police allege Kanapathipilla was involved with loan sharking, but has yet to be charged with a crime. It’s also believed that Kanapathipilla has now left the country after skipping a recent court hearing.
“Kanapathipillai told investigators he was gambling with the proceeds of a third mortgage, though didn’t show up to repeat that claim at a court hearing … to decide whether the seizure will be permanent,” CTV reported.
An OPP investigation showed that Kanapathipillai made several major cash transactions at Pickering Casino in July 2022. Casino employees flagged and reported the transactions to authorities.
“He made 10 transactions ranging from $50,000 to $100,000, totalling $824,700,” according to an affidavit detailing the events. “The source of cash was unclear, and it was atypical for an individual to possess such a large amount of cash.”
Beyond moving that cash through the casino, officials believe he made at least 50 large cash transactions at casinos since 2016. The affidavit notes that the One Toronto Gaming Anti-Money Laundering Unit identified Kanapathipillai as conducting “suspicious transactions due to the discrepancy between his occupation and casino gaming activity, the spike in his gaming activity, and the high number of large cash transactions.”
Casino Often Target by Money Launderers
Casinos have long been a target by criminals and organized crime because of the nature of the business: holding and using lots of cash. From the 1950s through the 1980s, many American mafia groups made use of Las Vegas casinos to skim cash to avoid taxation. A lot of money moves in and out of online casinos, especially when you take casino bonuses into consideration.
Criminal groups also use casinos to run other illegal operations including buying in for large amounts and then cashing out. This offers a chance to these groups to launder the cash as what might be considered “legitimate” gambling.
“By law, Canadian casinos have to report both suspicious cash transactions and large cash transactions totalling $10,000 or more to the Financial Transactions and Reports Analysis Centre (FINTRAC),” the CBC notes. “FINTRAC’s mandate is to identify money-laundering threats and pass on the information to law enforcement.”
Beyond Kanapathipilla’s case, the recent report on suspicious transactions may show wider efforts at not only reporting these types of transactions but also efforts at utilizing casinos for possible criminal financial activities. The Alcohol and Gaming Commission of Ontario (AGCO) enacted new Ontario casino regulations in 2022 mandating casinos to determine and corroborate a casino guests’s source of funds for larger transactions.
Using casinos as methods to launder money is a growing concern, according to Switzerland’s Basel Institute on Governance. In 2021, the industry saw record-breaking revenues of $261 billion in the U.S. and €87.2 billion in Europe. In 2022, Canada produced gaming revenue of $3.5 billion in U.S. dollars.
Like most jurisdictions with legalized gaming, Canada continues to work and fight criminal financial efforts. From 2019-2022 in British Columbia, the Cullen Commission examined possible money laundering in that province after allegations that hundreds of millions of dollars in illegal cash was being funneled through the gaming industry.
“The gambling industry is perfect for laundering criminal funds,” Basel Institute notes. “It includes a wide variety of businesses that juggle large transactions (often in cash) at a rapid scale, such as physical casinos, online casinos, bars and clubs housing poker machines, and both physical and online sports betting services. Moreover, it’s a big industry that’s growing exponentially.
“The fact that criminals can exploit this industry to launder money isn’t exactly a revelation. The extent to which this occurs, however, can still come as a shock – especially in countries with supposedly strict AML (anti-money laundering) measures.”