Money laundering in games

UPDATE 12:35 p.m.

A public inquiry into money laundering in British Columbia has heard that cash is still king but cryptocurrencies and other virtual trade could rise as a trend.

Criminology professor Stephen Schneider of St. Mary's University in Halifax says games and other online platforms with many players are creating their own forms of currency with real value attached.

He says in games like "Second Life," the currency can be used to purchase virtual products or advance to the next level, but he warns that it can also be used to launder the proceeds of criminal activity.

At the same time, Schneider says that while there have been a small number of cases of cryptocurrencies like Bitcoin being used in the drug trade, cash remains the preferred payment.

He says smaller denominations of $20 and $50 bills are most common, even in very large transactions.

Schneider is the first expert witness to give testimony before commissioner Austin Cullen in the portion of the public inquiry that will get an overview of money laundering and regulatory models over the next 3 1/2 weeks.

"It's not unusual to have multi-kilos of cocaine or marijuana being purchased with stacks of $20 bills," Schneider says.

Criminal entrepreneurs, drug traffickers and organized crime have developed money laundering as a "tactical imperative" to avoid suspicion, he says.

"In order to enjoy the fruits of their labour they need to be able to take that cash and try to convert it into more of an asset that's less suspicious all the while trying to hide the illegal source."

The inquiry heard opening arguments in February and will focus on specific industries at hearings beginning in September.

ORGINAL 6:30 a.m.

Money laundering in British Columbia will be under scrutiny again this week when a public inquiry resumes today.

Over the next 3 1/2 weeks, expert witnesses ranging from academics to police officers are expected to shed light on how dirty money is quantified and the regulatory models that are being used to fight it around the globe.

The B.C. government called the inquiry amid growing concern that illegal cash was helping fuel its real estate, luxury car and gambling sectors.

Opening arguments were held in February and the main hearings scheduled to begin in September will delve into specific industries.

Commission lawyer Brock Martland says the goal of this part of the inquiry is to create an understanding of what money laundering is and the strategies other countries have used to get a grip on it.

The hearings are being streamed online.

Expert witnesses will include Simon Lord of the United Kingdom's National Crime Agency, RCMP Chief Supt. Robert Gilchrist of the Criminal Intelligence Service of Canada and Oliver Bullough, author of "Moneyland: The Inside Story of the Crooks and Kleptocrats Who Rule the World."

"The sort of game plan is to have the view from 30,000 feet," Martland said.

The inquiry is being led by commissioner Austin Cullen. Attorney General David Eby has said he hopes it will answer lingering questions about how the criminal activity has flourished in the province.

B.C. also commissioned three reports that revealed B.C.'s gambling, real estate and luxury car industries were hotbeds for dirty money, but Eby said an inquiry will be able to dig deeper because it can compel witnesses to speak.

In February, the B.C. Real Estate Association told the inquiry that it supported the creation of a provincial land registry that identifies those buying property. It has also struck a working group to make anti-money laundering recommendations.

The B.C. Lottery Corp. said it has consistently reported suspicious transactions to Fintrac and pointed out unusual conduct to the gaming policy enforcement branch.

The corporation has also brought in measures to control or prevent the flow of dirty money since 2012, including creating an anti-money laundering unit made up of certified investigators and intelligence analysts.