The British Columbia Public Inquiry Commissioner said that the federal anti-money laundering system is ineffective and that the province needs to go its own way if it hopes to address the issue of suspicious money laundering in its economy.

In a final report released on Wednesday, Supreme Court Justice Austin Cullen said the province needs to establish a dedicated regional intelligence and investigations unit for money laundering and appoint a commissioner to oversee the government's approach to the problem.

Speaking to reporters immediately after releasing his report, Cullen said the public was right to be suspicious about the lack of response to what appeared to be a massive amount of dirty money flowing into British Columbia.

He said, "For far too long, money laundering has remained on the sidelines." "It’s time to change that."

For his part, Cullen said the agency tasked by the federal government with identifying money laundering threats – the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) – was ineffective, and that British Columbia needs to proceed on its own to make progress on the issue.

Cullen said in his report of over 1800 pages: "If the province wants success in combating money laundering, it must develop its intelligence capabilities to better identify money laundering threats."

Cullen’s report contains a total of 101 recommendations covering several areas in the state including law enforcement sectors, the real estate market, and banking regulations.

The proposed anti-money laundering commissioner would be a new agency established at the provincial level and responsible for tracking how Cullen’s recommendations are implemented.

Cullen was appointed to lead the money laundering investigation in 2019 after reports of illicit money spreading through the province’s casinos, housing markets, and luxury cars.

The commission’s final report comes after testimony from about 200 witnesses, including former politicians, law enforcement officials, and academics.

While Cullen said it is impossible to arrive at a specific dollar amount for money laundering in British Columbia, he placed the amount in the billions, describing money laundering as "a big problem requiring strong and decisive action."

The report said, "Professional money launderers operating in British Columbia launder huge amounts of illicit funds."

On the same topic, Cullen said that "an unprecedented amount of money was laundered through British Columbia casinos" during the period he studied from 2006 to 2016. He found that agencies responsible for stopping the issue were aware of the problem, but "failed to intervene effectively."

Cullen also said he found no evidence of corruption among elected officials overseeing the various ministries responsible for combating money laundering while suspicious funds flowed into casinos.

Cullen’s report offers a comprehensive set of recommendations, including adopting a stronger approach to asset forfeiture and issuing orders to pursue unexplained wealth "to deter corrupt foreign officials and others from transferring their illicit wealth to British Columbia through the purchase of real estate and other valuable assets."

He said this led to the collection of large-scale intelligence that had no value. From 2019 to 2020, the agency received 31 million individual reports, but it only sent just over 2000 cases to law enforcement – 355 of which went to police in British Columbia.

As for who will serve as the anti-money laundering commissioner in British Columbia if the province establishes the position, Cullen confirmed that he will not be the person taking on this role, despite the time he spent studying the problem.

Acknowledging the work the province has already done in tracking property ownership and cracking down on suspicious funds flowing through British Columbia’s housing market, Cullen said the country remains highly vulnerable to money laundering.

He said, "Money laundering in the real estate sector often involves the use of loans and mortgages."

He added, "The body regulating real estate in British Columbia needs a clear mandate to combat money laundering. He also criticized the real estate agents themselves for their poor record of reporting on anti-money laundering and compliance with the law."

Cullen’s final report said the province also needs more effective regulation on mortgage loans and suggested that the province establish a transparent register of company ownership. He also said a system must be established to report transfers exceeding $10,000.

Although many of Cullen’s recommendations revolve around the real estate market and the role of lawyers and real estate agents in transactions that have seen housing prices rise sharply across the province in recent years, he stressed that money laundering is not the fundamental problem that caused unaffordability in housing.

Cullen said, "I cannot say that money laundering is a fundamental cause of unaffordability in the residential real estate market."

"Money laundering must be addressed, certainly, but actions taken to combat money laundering should not be seen as a solution to the affordability problem."

Edited by: Dima Abu Khair