Fintrac Casinos ML

1+1 Financial Transactions and Centre d'analyse des operations
Reports Analysis Centre et declarations financieres

of Canada du Canada
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Mr.Bob Mackin Your File:

18-1073 Lynn Valley Road Our File: IA-2013-00013/ mn
North Vancouver, British Columbia
V7J 1Z6
October 4, 2013
Dear Mr. Mackin:
Further to your informal request which we received in our office on October 1, 2013,
please find enclosed a copy of the previously released records under case files
A-2013-00037, A-2013-00017, A-2012-00014, A-2012-00044, A-2011-00019.
As indicated on FINTRAC's website, the records are being disclosed in the form in
which they were released under the Access to Information Act (the Act) including
format, language and any exemptions or exclusions that were applied at the time of
release. In addition, given that your request is being made informally and not under
the Act, the provisions under the Act for resolving disputes do not apply to your
request.
Should you have any questions, please do not hesitate to contact me by telephone
at (613) 943-1073, e-mail: mijanoux.beauchamp@fintrac-canafe.gc.ca, or at the
address noted below. When communicating with us regarding this request, please
quote the file number noted above.
Yourst/uly,
C^
Mijanoux Beauchamp
ATIP Officer
End.
234 Laurier Avenue West, 24th Floor Ottawa ON KIP 1H7
Canada
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Money Laundering Risks

Associated to Canadian Online Gaming
Macro Analysis & Research Unit

October 2009
(This analysis was conducted in preparation for the FINTRAC Report on ML Trends &
Typologies in the Casino Sector but was not included in the final version as online
gaming currently offered in Canada are just an extension of provincial lottery services
and not casino services )
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1
Background
The online gaming industry has seen substantial growth over the last several years, as
exhibited by the value of the industry, estimated at $17 billion dollars.1 While it is a legal
activity in almost 100 jurisdictions around the world, it is notably illegal in the United
States, where it is also illegal for financial entities to process transactions which may
reasonably be suspected to be related to online gaming activity. In Canada, online gaming
is also illegal unless, like traditional gaming, it falls under certain exceptions of the
Criminal Code. These exceptions allow the conduct and management of lotteries, horse
racing and venues that provide slot machines, roulette, card games and other games of
chances by provincial governments and certain licensed charities. Furthermore, lotteries
must be restricted to residents of the province(s) in which the lottery is operating, unless
cooperative agreements exist between provinces.
Two Canadian jurisdictions have introduced an online portal for a select suite of gaming
products. While some of the games are interactive, all of the games are currently lottery-
based, meaning that the outcome of the game is predetermined. However, at least one
jurisdiction is reportedly considering the introduction of classic casino-style games to its
online portal in the near future.
The introduction of online gaming in Canada is novel for gaming operators as well as
regulators, including FINTRAC. The majority of money laundering cases related to
online gaming disclosed by FINTRAC deal with the illegal operation of online casinos,
and the laundering of proceeds from this illegal activity. Because these operators do not
report transaction details to FINTRAC, there has been no cases disclosed involving
money laundering activity through the use of online gaming portals.
FINTRAC s international partners have, however, reported the use of online gaming sites
for money laundering activity.2 The introduction of online gaming by certain Canadian
reporting entities will provide FINTRAC with an opportunity to examine transactions
through the industry first hand, in order to determine whether suspected money
laundering activity is taking place through online gaming sites in Canada, as well as the
types of suspicious transactions related to this activity.
Assessment
The following section outlines some of the money laundering risks of the Canadian
online gaming venues, which should be addressed in business risk assessments related to
online gaming.3 The following section is organized according to some of the specific
risks4 identified by the Alderney5 Gambling Control Commission, which has published
1 Priest, Lisa. "Casinos spend millions to make losers feel like winners." Globe and Mail. October 2, 2009.
2 FATF - XJJ: Report on Money Laundering Typologies (2000 - 2001). February 2001.
3 This list is not exhaustive. The information contained herein is meant to serve as a guide to the casino
sector only. Online gaming operators should identify other risks specific to their operations.
4 This section will identify vulnerabilities associated to some of the specific risks identified by the Alderney
Gaming Control Commission. General risks are those that are associated to the gaming industry in general,
and are well known to casino operators.
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guidance for e-gaming licensees for the prevention and detection of money laundering
and terrorist financing activity. The Alderney Gambling Control Commission guidelines
are referred to in this report because at least one of the jurisdictions operating an online
gaming portal has adopted all of the Alderney guidelines for its online gaming operations.
Specific Risk - Customers
The risks associated with customers include the identification of customers as well as
customer behaviour. The nature of the online world makes customer identification
problematic, given that in online situations, the customer does not physically interact with
casino staff. The following risks associated with customer identification and customer
behaviour have been identified by FINTRAC in relation to online gaming portals in
Canada:
The use of stolen or fraudulent credit cards - Both online portals in Canada require
account holders to provide credit card information in order to confirm the age and
identity of the account holder. Both portals also allow account holders to fund their
online account by way of credit card. For added consumer security, neither portal retains
credit card information following the registration process, or following the transfer of
funds to the online account. It should be noted that fraudulent or stolen credit cards could
be used to set up a single account, or multiple accounts.
Payouts with minimal gaming activity - When setting up an online account, players
create a profile, which specifies the manner in which winnings under a certain threshold
and other payouts will be processed. Players have the opportunity to select whether these
funds will be paid by cheque or whether they will be deposited directly to the player's
bank account. PayoLits of funds drawn on a credit card, if under a certain threshold, will
be refunded to the credit card.
Automatic payouts following account overload- Both online portals in Canada have set
limits to the amount of funds that can be loaded to their online accounts. Any funds that
are loaded above the limit are automatically refunded to the customer, in the manner
requested in their account profile (except, as previously stated, in the case of credit cards,
where the amount is automatically refunded to the card'
5 Alderney is the most northerly of the Channel Islands and a British Crown dependency. It is part of the
Bailiwick of Guernsey.
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Specific Risk Products
Similar to "brick and mortar" casinos, certain games that may be offered in online
casinos pose a higher risk for money laundering activity. The following risk is associated
with casino products which may be introduced to online gaming portals in Canada:
Traditional casino games online - As previously stated, currently both online portals in
Canada offer lottery-based gaming. There is little opportunity for funds to be laundered
through game play itself, as the outcomes of the games are predetermined. If, however,
traditional casino gaining is introduced, opportunities for money laundering can increase.
Specific Risk - Banking Methods
Banking risks include the payment mechanisms for depositing funds into the customer's
online account. The following risks associated with banking methods have been
identified by FINTRAC in relation to online gaming portals in Canada:
Third party activity- Both online gaming portals in Canada allow online gaming
accounts to be funded by electronic funds transfers directly from bank accounts.
Participating financial institutions which offer web banking will allow an individual to
make a "bill payment" to the appropriate online gaming operator, by selecting the
appropriate operator as a pavee, and providing the online gaming account number.I
Other web payment methods - The success of online gaming in Canada may lead online
gaming operators to consider accepting alternate payment methods, including payment
methods which have become increasingly popular on the Internet. FINTRAC has
previously described the vulnerabilities of such Internet payment systems (IPS), which
include payment processing IPS, such as Moneris, debit-account IPS, such as PayPal, and
digital precious metals IPS, such as e-Gold. These vulnerabilities are due to the fact that
two of their key attributes (anonymity and untraceable transactions) match those of
physical cash, the ideal method of value transfer for criminal activity. FINTRAC has also
previously described the increasing usage of IPS in money laLindering case disclosures.
The introduction of these types of payment methods to online gaming in Canada would
significantly increase the opportunity for money laundering activity through this service.
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ACKGROUND / CONSULTATION
In January 2011, the CBC ran a number of stories indicating that BCLC was not
adequately dealing with the risks of money laundering. These stories included
interviews with the Vancouver IPOC Inspector and other law enforcement who
echoed concerns about the robustness of BCLC's AML approach. In response to
this, the Minster of Public Safety and Solicitor General ordered a review of AML
measures at BC Casinos.
BCLC is responsible for managing and conducting gaming in BC and is defined as

the reporting entity for the purpose of the PCMLTFA. GPEB is responsible for the
integrity of gaming in BC and has included AML under this broader mandate and
has had an MOU with FINTRAC since 2005. Both BCLC and GPEG fall under the
Ministry of Public Safety and Solicitor General. (Of note, the Minister responsible
changed between the time the report was ordered and it was published).
The Minister tasked a proceeds of crime / asset forfeiture prosecutor to author the
report. He consulted with IPOC and also contacted me. At the time I was
contacted, the report was not going to be made public and the full set of
recommendations was not provided. The inquiry centred on casino obligations in
respect to domestic EFTs in furtherance of a move away from cash as that was
central to the criticisms levied by the CBC. At the time I explained what BCLC's
obligations would be and| j I
later met with the Solicitor General ADM, (an ex-RCMP Commercial Crime Section
Inspector from Alberta) in conjunction with a scheduled meeting with GPEB.|
RDIMS 352830
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\
On August 24, 2011 the Province of British Columbia released two *
^
titled SUMMARY REVIEW: Anti-Money Laundering Measures at BC Gc
and a second specifically from the Ministry of Public Safety and SoL
Gaming Policy and Enforcement Branch titled Action Plan to Re'
/Money Laundering Measures at BC Gaming Faciiities.
PERSPECTIVES ON THE REPORT
RDIMS 352830
ATIP Doc#382523 0002

FOR REGIONAL OPERATIONS AND COMPLIANCE USE ONLY PROTECTED B
Table of Contents
Ta b l e of Contents 1
Overview 2
Casino Types 4
Regulatory Environment 5
Non-Compliance Risk Assessment 8
Ta b l e 1: Risk Assessment by Province 8
Money Laundering Risk Assessment 9
Te c h n i q u e s Used to Launder Money 13
Ta b l e 2: The Laundering Cycle 18
Suspicious Transaction Indicators 19
Appendix 1: Casinos and Racetracks 20
Ta b l e 3: Casinos 20
Ta b l e 4: Slots-at-Racetracks 21
Appendix 2: Statistics 22
Ta b l e 5 : C a s i n o s b y P r o v i n c e ( a s o f M a r c h 2 0 0 8 ) 22
Ta b l e 6 : G a m e s A v a i l a b i l i t y b y P r o v i n c e 22
Table 7: MOUs with Provincial Regulators (as of March 2008) 22
Appendix 3: Regulators and Operators 23
Appendix 4: Legislative Requirements for Casinos 24
Appendix 5: Useful Links 25
RDIMS#9603 Last revised February 2008 Page 1 of 25

NOT FOR FURTHER DISTRIBUTION
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F O R R E G I O N A L O P E R AT I O N S A N D C O M P L I A N C E U S E O N LY P R O T E C T E D B v ^
Overview
For the purposes of the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act and Regulations, "Casino" means a person or entity that is
licensed, registered, permitted or otherwise authorized to do business under any of
paragraphs 207(1 Ma) to (2) of the Criminal Code and that has an establishment
a) that the person or entity holds out to be a casino and in which roulette or card
games are carried on; or
b) where there is a slot machine, which, for the purposes of this definition, does
not include a video lottery terminal.
It does not include a person or entity that is a registered charity as defined in

subsection 248(1) of the Income Tax Act and is licensed, registered, permitted or
otherwise authorized to carry on business temporarily for charitable purposes, if
the business is carried out in the establishment of a casino, for not more than two
consecutive days at a time under the supervision of the establishment.
Canada has a unique gambling policy structure. Unlike many international

counterparts, gambling operates exclusively under the control of the provincial
and territorial governments.
As of January 2008 there are 95 gaming sites in Canada that fall under the
PCMLTFA definition of "casino". (Refer to Appendix 2 for a breakdown by
region and province.)
Since 1992, gross gambling profits have grown more than threefoldfrom $2,734
million in 1992 to $9,040 million in 2000 (current dollars). However, the main
growth components have been the emergence of casinos and VLT revenue. In
1992, casinos accounted for only 1% of gross gambling profit and by 2000 this
portion had risen to 29%.
This growth in casino revenue is the result of an increase in casino activities of

573% while lotteries have remained a steady source of net income, rising by 19%
in the last eight years. Overall, casinos now generate about one-third of total
provincial net gambling revenue.
Government net revenue from these casinos was $1,814 million in 2000. Ontario
generated the most revenue from provincial casino activity at $985 million, more
than all other provinces combined.
RDIMS #9603 Last revised February 2008 Page 2 of 25

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Landmark Economic Impact Study Reveals Gaming Industry in Canada Worth $15.3
billion in Direct Spending Alone1
April 26, 2007
Toronto, April 26, 2007 The most comprehensive study ever conducted on the economic
impact of gaming in Canada reveals that the gaming industry is responsible for more than $15
billion in direct revenue, more than $2 billion in direct salaried employment for Canadians working
in the industry, and $10 billion in current capital investment.
"This is by far the most detailed research produced to date on the economic significance of the
Canadian gaming industry," said Bill Rutsey, President of the Canadian Gaming Association
(CGA), who commissioned the study." It provides us with a rigorous basis of information to better
understand our industry's pivotal role in the national economy."
The study covers the economic impact of gaming, broken down by type and by region, with a
focus on overall revenues, direct employment, revenues generated for all three levels of
government, and other ancillary benefits.
Subsequent phases of the study will include an assessment of both the indirect and induced
impacts of the gaming industry in Canada to provide an even greater level of detail concerning
the overall impact, as well as further regional breakdowns on the impacts of specific gaming
activities. Case studies will also be developed to illustrate localized impacts in specific regions.
Specific findings include:
The gaming industry contributes $15.3 billion to the economy directly, with most of this revenue
($8.6 billion or 57 per cent) going to government programs and services, as well as to charities.
Gaming sizably exceeds other segments of the entertainment industry in terms of the direct
impact on the economy. In fact, gaming revenues approximate those of the spectator sports,
television, movies, books/magazines, and performing arts sectors combined.
The industry generates approximately $700 million in non-gaming revenue, such as food,
beverage and entertainment.
From the perspective of the hospitality sector, gaming is just behind full-service restaurants (at
$17.2 billion) and on par with limited-sen/ice restaurants (at $15.4 billion) in terms of economic
contribution. Gaming also places ahead of accommodation services (at $14.3 billion) and air
travel (at $11.9 billion) with Canada's two major airlines.
The industry's investment in current capital construction is approaching $10 billion, with the
largest portion of that investment (49 per cent) occurring in Ontario.
"Gaming has grown significantly over the past decade to become an essential pillar of the
entertainment industry in Canada," said Mr. Rutsey.". It is rewarding to be able to reliably
demonstrate how the majority of spending in the industry goes directly back to Canadians, in the
form of paychecks, construction in communities, and in revenues for the programs and services
and charities that we value."
1 Source: Canadian Gaming Association (www.canadiangaming.ca)

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The Canadian Gaming Association represents the gaming industry's leading operators,
manufacturers, suppliers and other stakeholders nation-wide.Source:
www.canadiangaming.caw3SinO I VpGS
In Canada, there are different kinds of casinos and establishments that fall under
paragraphs 207(0(0) to (g) of the Criminal Code. Here are the ones that can be found in
the different provinces.
Government: Government casino refers to a government-operated

commercial casino.
Provinces: Saskatchewan, Manitoba, Quebec and
Prince Edward Island.
First Nations: First Nations, or Aboriginal casino, refers to casinos that

are operated by First Nations communities.
Provinces: Saskatchewan, Manitoba and Ontario
Commercial/Destination: These establishments, operated by private companies under

the auspices of the province's regulator, differ from
community casinos in that the service providers create a
destination facility that attracts visitors from beyond the
casinos' immediate area, not only for gaming
entertainment, but for the enjoyment of other amenities as
well (for example, marinas, hotels or convention centres).
Provinces: British Columbia, Saskatchewan, Yukon,
Ontario and Nova Scotia
Community: Community casinos are strictly casino facilities operated by

private companies under the auspices of the province's
regulator. They differ from commercial casinos in that
their size is much smaller.
Province: British Columbia
Charity: Casinos operated by charitable and non-profit organizations

where funds are raised and used locally by these
organizations to support their communities.
Provinces: Alberta and Ontario
Seasonal: Casinos that are permitted to operate under subsection

207(1 )(c) of the Criminal Code. The casinos are operated
by a fair or exhibition for a few weeks per year, while the
fair or exhibition is open to the public.
Provinces: British Columbia, Alberta and Ontario

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F O R R E G I O N A L O P E R AT I O N S A N D C O M P L I A N C E U S E O N LY P R O T E C T E D B
Regulatory Environment
The Criminal Code of Canada delegates the authority to oversee licensed gaming
activities to the provinces. Each province sets its own gaming policies that are
administered by provincial commissions or authorities.
British Columbia
Since 1998, all permanent casinos in the province are privately owned casinos.
In British Columbia, the Gaming Policy and Enforcement Branch (GPEB) of the
Ministry of Public Safety and Solicitor General is responsible for policy and
legislation, standards, regulation, licensing, registration, distribution of gaming
proceeds and enforcement for all sectors of gaming.
The British Columbia Lottery Corporation (BCLC) conducts and manages table
games, making the Corporation responsible for all commercial and community
casino gaming, with the exception of the one at the Pacific National Exhibition
which runs for two weeks under an agricultural fair permit.
Alberta
All the casinos in Alberta are operated by licensed charities.
The Alberta Gaming and Liquor Commission (AGLC) is primarily concerned
with licensing casinos and ensuring that the operators meet certain operational
and legislative requirements. The commission issues two types of licenses: one to
the casino operator and the other to the registered charity.
There are 8,000 charities in Alberta. Each year, 180 of them are permitted to
operate a charity gaming operation in each of the casinos for a period of not more
than 2 days. Volunteers within the charity run the casino cash cage and each
charity hires, on a private contract, an advisor to oversee the cage operations.
There are also four first nations casinos, with the first nations band who runs each
casino being the "charity" as well.
Saskatchewan
The Saskatchewan Liquor and Gaming Authority (SLGA) regulates the gaming
industry in Saskatchewan. It provides regulatory, educational and support
services to licensees and gaming suppliers.
For the five First Nations casinos in the province, the SLGA works in
collaboration with the Saskatchewan Indian Gaming Authority (SIGA).
The Saskatchewan Gaming Corporation (SGC) and SIGA operate the permanent
casinos in the province.
Manitoba
The Manitoba Gaming Control Commission (MGCC) regulates gaming activities
in the province. However, the MGCC is primarily responsible for gaming
registration and video lottery terminals, and has limited audit and oversight
powers with regard to Manitoba casinos.

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The Manitoba Lotteries Corporation (MLC) is the crown corporation of the

provincial government answering to the Minister responsible for lotteries. It
operates and manages the two casino properties in Winnipeg: Club Regent Casino
and McPhillips Street Station Casino.
Manitoba also has two First Nations casinos that are run independently from the
MLC.
Ontario
The Alcohol and Gaming Commission of Ontario (AGCO) regulates the gaming
industry in Ontario. It establishes compliance models for Ontario casinos,
approves internal control manuals, conducts inspections and forensic
investigations and registers gaming floor supervisors and casino suppliers.
Ontario Lottery and Gaming (OLG) is responsible for day-to-day operation of the
province's charity casinos and slots-at-racetracks, and also contracts out
management of the commercial casinos to private operators.
Quebec
The Regie des alcohols, des courses et des jeux (RACJ) regulates the types of
games that can be played in Quebec casinos. Also it has the power to deliver,
suspend or revoke the licenses of casinos and charity casinos. Societe des casinos
du Quebec takes care of the hiring and the training of employees.
Societe des casinos du Quebec, a subsidiary of Loto-Quebec, is in charge of the
operations management of the province's casinos.
Nova Scotia
The Nova Scotia Alcohol and Gaming Authority (NSAGA) is a licensing
authority for liquor, gaming and amusements, and also regulates liquor, gaming,
and amusements activity for which licenses have been issued.
A private operator runs the province's two casinos on behalf of the Nova Scotia
Gaming Corporation (NSGC).
Prince Edward Island

The P.E.I. Lotteries Commission is a licensing authority for Government gaming
(Lotteries Commission Act and Regulations).
Consumer Services, Office of the Attorney General, is responsible for Charitable
gaming. The department has the responsibility to administer and regulate
charitable gaming as a result of the Lieutenant Governor in Council of the
province having issued an order pursuant to Section 207(b) of the Criminal Code
of Canada. That order is called the Lotteiy Schemes Order.
Gaming regulators in Canada are loosely represented by the Canadian Association of

Gaming Regulators (CAGRA), which is affiliated to the North American Gaming
Regulators Association (NAGRA) in the United States. The Canadian association is an
informal group with no established offices or physical structure. Their purpose is to
bring together agencies that regulate gaming activities and provide them a forum for the
mutual exchange of regulatory information and techniques, collecting and disseminating
regulatory and enforcement information, procedures, and experiences from all
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jurisdictions and provide on-going gaming education and training for all members.
Members responsible for organizing meetings and conferences change from year to year
on a voluntary basis.

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Non-Compliance Risk Assessment
In September 2004, FINTRAC sent Compliance Questionnaires to every casino in

Canada that was operational at that time (84 in total). An additional CQ was sent
in September 2006 to a new casino in the Central Region and 3 more were sent to
new casinos in the Western Region in January 2007.
In general, the responses indicated a high level of compliance in each region.
In fiscal 2004/05, FINTRAC signed a number of Memoranda of Understanding

(MOUs) with provincial gaming regulators to share compliance-related
information (see Appendix 2).
In fiscal 2007/08, FINTRAC officers conducted compliance examinations on

casinos in the Western and Central regions.
In addition, the gaming regulators with which FINTRAC has an MOU conducted
several additional compliance reviews.
Table 1: Risk Assessment by Province

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Money Laundering Risk Assessment

Casinos in Canada, with few exceptions, are some of the most highly regulated
and structured businesses in the country. There is a lingering perception of
casinos - stemming from their origins in North America during the 1930's when
"Bugsy Segal", an entrepreneur employed by La Costra Nostra (U.S. Mafia),
introduced them in Las Vegas - that continues to vilify the industry. The
perception of casinos being closely linked to organized criminal activity was
justified over the ensuing decades, and only in the recent past have efforts of
legislators and law enforcement been able to better regulate the industry in the
United States.
Commercial casinos in Canada were first introduced in the early 1990's with the
opening of Casino Windsor in Ontario. They were followed shortly thereafter
with the establishment of a number of casinos, both commercial and charity,
opening in most of the remaining provinces and territories. The Canadian
experience differs dramatically from the U.S. in that, as indicated earlier, the level
of regulation from the introduction of the industry in this country has been
extraordinary.
It is important to understand how casinos operate to assess the potential risk of

money laundering activity in this industry and secondly, to assess the potential
risk of non-compliance to the requirements of the PCMLTFA.
Casinos are a highly lucrative business for all parties involved except the
customer. This includes, where applicable and dependent on their structure, the
casino operators, owners, charities and provincial governments.
Profits as of 2000 for all casino operations in the country now total in excess of
$9,000,000,000.00 per year. As such, it is important to appreciate the amount of
money that can be made legitimately in this industry and compare it against the
potential amount of money that casinos can generate through their involvement in
money laundering activity and the potential risk to both the industry and
government revenues should they be apprehended willfully being complicit in this
type of activity.
The number of opportunities available to a criminal to launder money on a

consistent basis at a casino is limited. Successful laundering attempts require
considerable amounts of time and dedication to move substantial amounts of
money or require the assistance of a number of co-opted persons in the casino.
Casinos and regulators as well as law enforcement diligently monitor the
activities at Canadian casinos. The structure, systems and oversight in Canadian
casinos detract from their popularity as a laundering mechanism. This is not to
say that the activity does not continue, it merely means that more attractive and
easier methods are available.

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As in most laundering schemes, the veil created, dependent on the method used, is
thin at best. A simple enquiry by the authorities to a casino to determine the
nature of the winnings by a criminal who presents a cheque at a local bank from
the casino will reveal the nature of the transaction. Recall that casinos maintain
detailed records on a large portion of their customers, especially those who win
large amounts. If the person truly and legitimately won the money, this can be
verified. Any of the schemes outlined above will not withstand close scrutiny.
Overall, casinos are not the preferred choice by criminals to launder their money -
but they have been successfully used in the past and will continue to be used in
the future.
There are a number of obstacles in place to discourage money laundering activity.

Consider the following as it relates to most commercial/destination casinos:
Casinos in Canada, unlike other jurisdictions, operate exclusively under the

control of the provincial or territorial government. Most regulators are in the
casinos on a permanent basis to ensure compliance with a myriad of legislative
requirements. In some provinces there is also a strong police presence in the
casino on a continuous basis to detect, deter and investigate criminal activity,
either internal or external.
Most casinos are owned and operated by the province or owned by the province
and operated by a management consortium or group. As indicated earlier, both
have a vested interest in the profitability of the casino. Casinos that operate with
management consortiums risk the closure of their operations globally if caught in
a criminal act.
Because of the vast amounts of cash and negotiable products (i.e., chips or tokens)
that they process in a given day, casinos are highly susceptible to losses as a result
of internal theft and have taken extreme measures to minimize this possibility.
Every casino employee, supplier, service provider, etc., has been security
screened, interviewed, subjected to a rigorous background investigation, criminal
records check and reference audit by the provincial regulatory body and often by
the police with jurisdiction.
Security in casinos is extremely stringent for two purposes: to prevent and detect
internal theft, fraud or other criminal activity and to detect and prevent criminal
activity by their customers while on the casino property. In order to accomplish
this, most have their own seciirity personnel throughout the casino in addition to a
AT I P Doc# 382530 00010
police presence. Surveillance systems are in place that make it virtually

impossible for anyone to move anywhere in the casino without being observed.
These surveillance systems include the presence of strategically placed cameras
throughout the casino property that enable the security staff to track a suspect as
they move. As all casinos across Canada shift to digital surveillance systems
almost all recordings can be kept perpetually and are made readily available to
law enforcement if reqLiested. In casinos with a law enforcement presence, the
law enforcement personnel can override the casino's security personnel
surveillance system if desired and use the casino cameras for their own purposes.
Communication amongst the staff is highly sophisticated and security staff,
floorwalkers, pit bosses and dealers compliment the surveillance cameras as a
means of tracking potential problems or monitoring the activities of preferred
customers.
Anyone entering the casino and purchasing a large amount of chips or tokens
immediately attracts the attention of the staff.
In many cases, customer loyalty programs (i.e., "Players Advantage Club", etc.)
are provided to any casino patron regardless of the extent of their play. In this
manner, the casino knows approximately 48% of the players in a casino.
These loyalty programs also allow the casino to track the play of every person
who uses the card. At the end of a day's play, the casino can tell the exact amount
of money a player spent, how much they won or lost, their average bet, the
amount of time spent at each table or slot machine, etc.
Approximately 2% of the casino patrons have established accounts with the

casino (front-money or credit). These are generally major players.
Once a patron attracts the attention of the casino to the extent that they decide to
monitor their movements (i.e., a person exchanges a large amount of money at the
currency exchange counter or purchases a large amount of chips) their every
movement is under observation. If, over time, they see that the customer is not
playing but merely spending time wandering aroLind the casino or is engaged in
minimum play in relation to the amount of chips purchased, they will in most
cases advise the cages to give you cash back upon the customer redeeming his or
her chips.
Games of chance, including slots, are heavily weighted toward the casino. For
instance, slot machines, by law, are geared so that the player will ultimately win
over eternity. All the slots are monitored electronically as to how much they are
giving out in winnings. The dealers and croupiers are closely monitored by pit
bosses, which ensure their honesty and the incidence of customers winning
consistently. This is to ensure that the employees remain impartial, that there is
no complicity between the dealers and the customers and that the customers are
not utilizing some scheme to enhance their ability to win (i.e., card counting,
AT I P Doc# 382530 0 0 0 11
complicity between players or other forms of cheating the house). Every dealer
and croupier is constantly viewed by overhead cameras, which are monitored by
security personnel elsewhere in the establishment. At the end of each game where
the dealer or croupier deposits the money into the house slot or collects chips
from the table, the employee will raise their hands and rotate them to show the
customers that they have not palmed any money or chips and for the overhead
cameras for the same reason.
All major casinos share information on "high rollers", suspected "counters",

"system players", criminal customers, potential threats, cheats and new and
evolving schemes that put the industry at risk.
The accounting practice of casinos is layered and there are a number of highly
controlled checks and balances in the system to account for every penny that
passes through the casino. The various stages are independent and stringent
controls are in place mainly to ensure that the casino is not defrauded or the
victim of theft internally. Due to the number and independence of the various
stages in the accounting cycle, the injection of large amounts of money into the
system undetected is virtually impossible without the complicity of a large
number of employees in the chain.
As can be seen, the casino industry is a highly controlled and regulated industry in
Canada. The majority of systems put in place by casinos to prevent and detect
internal or external theft, fraud or other criminal activity serve a second and
residual benefit - that is, they inhibit the ability of a person or group to launder
large amounts of money through a casino undetected. The potential sanctions that
can be levied against a Canadian casino if it becomes complicit in laundering
activity also act as a strong deterrent.

AT I P Doc# 382530 00012
Techniques Used to Launder Money

iMniwmMWMHOTiffliwiiiiiiiMiiiiiiM w i m i i i i i i i i i i i i i M i r i i i M M i t w i ^ ^ ^
This segment will outline the various schemes that have been detected in the industry and
by law enforcement and will attempt to outline the limitations associated with each
method. The following are techniques have been identified:
Placement or Smurfing Schemes of Lesser Amounts of Cash
In this scenario, an individual or group of individuals descend on a casino with

large amounts of cash, usually divided into smaller amounts to avoid the reporting
threshold.
The individual purchases chips and participates in playing a minimum amount of

money over a period of time and then cashes in the remaining chips with a view
of receiving a cheque from the casino upon redemption of the chips.
This technique is likely the most popular method used and can be effective
especially when several persons are involved in the scheme (i.e., $100,000.00 is
divided between 5 players prior to their arrival and all leave at the end of the day
with a casino cheque).
Any gambling losses incurred are merely the price of cleaning the cash and are an
acceptable cost of doing business.
This technique is not without some risk. As described in the previous segment,
persons purchasing large amounts of chips are, in all likelihood, being monitored
or subject to surveillance by the casino. The casino likes to "comp" high rollers.
Players not wishing to be "compted" are unusual and this may in turn trigger their
attention. The casino, in most instances will observe the lack of playing by the
participants and will notify their staff not to issue a cheque but to redeem the
chips in cash.
In many cases, where the group divides the money on casino property, the casino
will observe this activity in the parking area or elsewhere and surveillance will
commence at that stage. The casino closely monitors this type of activity and
often the person or persons upon redemption will be asked to leave and not return.
Their pictures and activities will be communicated to other casinos in the circuit
and this will automatically trigger their activities being monitored should they
show up at other locations. Once this scheme is detected, the casino will prohibit
their presence in the casino and a second opportunity is removed. Additionally,
the information is shared with other casinos and this inhibits their ability to
attempt a similar scheme at another location. As well, in order to avoid detection,
the amounts must be kept at a minimum and in order to "clean" substantial
amounts takes considerable time and effort. Casinos in Canada are well aware of
this type of activity and it is closely monitored.

AT I P Doc# 382530 00013
Playing Against Another Player
Most table games in casinos require the customer to play against the "house".
Table games only account for approximately 12% of a casino's profit and are
generally used to add atmosphere and attract the play of the uninitiated. Learning
how to play most table games is a long process (as most are fairly complicated)
and during the learning stage the house stands to make a lot of money.
Some games, such as various forms of poker, allow for individuals to play against
one and other with the house merely supplying a dealer and receiving a piece of
the action. In this technique, two or more players will congregate at a table and
intentionally lose to a predetermined player. In theory, the player selected to win
will eventually cash in his chips and walk away with a cheque. This can be for
substantial amounts of money if successful.
The dealers are very well versed in the games that they deal and should detect this
type of activity early into the game. In the absence of the dealer identifying the
scheme, the pit boss - even better versed - will likely detect the scheme and the
players will be asked to leave. Very few games offer this opportunity, as the
house does not make as much as they normally do in games where the customer
plays against the house.
Texas Hold 'Em, a form of poker, has become a very popular and trendy game
and many casinos will hold daily or weekly tournaments with dozens (or even
hundreds) of players competing against each other.
Establishing Accounts at a Casino
Some of the larger commercial casinos allow the customer to establish accounts
with them. Generally, there are two types of accounts offered: credit accounts
and front money accounts.
A credit account allows the customer to borrow funds from the casino. Usually,
these accounts must be settled at the end of each month.
A front money account allows the customer to deposit money with the casino,
which they can then draw on to facilitate gambling. This way, they do not have to
bring cash every time they visit the casino.
In those instances where the casino is managed by a consortium, a player who
establishes an account can wire transfer these funds to other casino locations
within the chain. This service is generally reserved for "high rollers" known to
the casino. The laundering technique available is to establish an account with the
casino with affiliates in other jurisdictions, to deposit large amounts of money for
the purpose of playing at the casino and eventually to ask that a large amount of

AT I P Doc# 382530 00014
the account be wired to another jurisdiction so that you can play at that locale in
the near future.
Conversely, the player can go to the other jurisdiction and have the money
transferred there, cash out for a cheque and accomplish their goals. This type of
activity is closely monitored and as stated is generally reserved for established
high-end players.
Most casinos in Canada do not offer this option, most are not affiliated through
their management group with other casinos in other jurisdictions and fewer still
encourage this type of activity.
A variation of this theme is to request that your winnings be wire transferred to an

account of your choice. This is generally done for security considerations, as the
casino would rather not see the customer being targeted for theft or robbery due to
being in possession of a large quantity of cash. However, as indicated earlier in
this paper, the casino is well aware of their major winners and requesting this
service when cashing in chips could be suspicious.
Injection or Placement of Large Quantities of Cash
In this process, an individual or group provides casino owners or employees with

large amounts of cash to inject into the casino cash stream so that it appears to be
the normal operation of the casino. As casinos are a cash intensive business, the
placement of large amounts of cash would generally go unnoticed by the
authorities.
This scheme is no different than the use of other high cash businesses to disguise
the source of funds, such as restaurants, vending operations, bars, car washes, etc.
This technique is generally used in instances where the persons that own or
operate the business use the business to "clean" money that is intermingled with
money that is legitimately earned and can potentially be used to launder extremely
large amounts of money.
A variance of this scheme occurs when an individual or group approaches the
casino owners or management to inject large amounts of cash into the casino with
a view of receiving a cheque at the other end for services rendered or through
false invoicing. The casino would charge a fee for their services and at the end of
the day the criminal has a negotiable instrument that appears to be the result of
winning large at the casino or for rendering them a service or selling them goods.
Both of these schemes require the complicity of the owners, management staff or
employees of the casino or all of the above. In previous years in the U.S., when
alleged members of criminal organizations individually owned casinos, this was a
very popular and effective method to launder extremely large amounts of money
derived from criminal activity.

AT I P Doc# 382530 00015
In Canada, the majority of casinos are owned by their respective provincial

governments. In those instances where they are privately owned or managed, the
intense regulatory presence and oversight all but prohibits this type of activity.
Assuming that the activity goes undetected by the authorities, the scheme still
requires the complicity of a large number of persons employed by the casino to
alter the books and records to reflect the infusion of the cash into the system
undetected. The number of persons involved in this type of scheme is directly
related to the likelihood that the scheme will be unearthed. This, in concert with
the potential losses that would occur should the scheme be detected by the
authorities or the heavy regulatory presence, minimizes the risk of this type of
technique being used in Canada. In those privately owned and smaller casinos
operating in Canada this technique however, is a possibility.
Ticket In Ticket Out (TITO)
Ticket In Ticket Out (TITO) is a relatively new system for slot machines and
VLTs that is designed to replace coins or tokens. Traditionally, slot machine
jackpots were paid by coins or tokens falling into the slot tray, which the
customer would then collect in buckets.
TITO replaces the coins with a slip of paper (or "ticket") that contains a unique
bar code. The ticket can be fed into other slot machines to continue play, or
scanned at cashier stations for a cheque or cash.
The original intention of TITO was to reduce the casino's operational costs and
cut down on slot machine fraud. However, we have received feedback from some
casino operators and regulators in Nevada that indicates TITO is being used as
currency for drug deals.
In this scheme, a person will feed several hundred dollars into a slot machine,
engage in minimal play or no play at all and cash out. The person receives a
ticket (which is usually valid for 30 days or longer) and uses it to purchase illicit
drugs. Once the dealer has collected a number of tickets, he will then go to the
casino either by himself or with a group of "smurfs" and cash in the tickets for a
casino cheque. This scheme can also be used directly by the person laundering
money, i.e. a person will feed several hundred dollars into a slot machine, engage
in minimal play or no play at all and cash out for larger denominations or casino
cheque.
The TITO system is gaining popularity in Canadian casinos and gradually
replacing the "traditional" slot machine payouts. While we have not yet seen the
issues reported in Nevada, it is a trend that should be closely monitored.
Conversion (Refining) and Automated Redemption Machines
Large quantities of cash can be difficult to transport, particularly in smaller

denominations such as $10 and $20 bills. Criminals will often convert or "refine"
AT I P Doc# 382530 00016
smaller denomination bank notes for large denomination bank notes to facilitate
easier transportation.
The TITO system in most casinos has been supplemented with automated
redemption machines, whereby casino patrons can cash out their slot tickets
automatically without the need for visiting a cashier.
The Automated Redemption Machines often dispense $100 bank notes. It is a

simple matter for a criminal or group of criminals to feed small denomination
bank notes into some slot machines, cash out, receive the tickets and redeem them
for large denomination bank notes at an automated redemption machine. This can
be done without the criminals ever having to interact with casino staff.
Furthermore, the Automated Redemption Machines offer very little means of
controlling/monitoring this type of activity on a large scale.
Bulk Casino Chip Smuggling
Law enforcement has recently expressed concern about cross-border casino chip
smuggling. Criminals are constantly seeking alternatives to bulk cash smuggling
to avoid cross-border currency and monetary instrument reporting requirements.
In this scheme, a criminal or group of criminals will amass a significant number

of casino chips and then use them as currency for the drug trade. Since casino
chips are not considered "monetary instruments", criminals can cross the border
without having to make any declarations. The.casino chips are subsequently
cashed in for a casino cheque.
Areas where casinos straddle both sides of the border would be particularly
vulnerable to this scheme (i.e., Windsor/Detroit or the Niagara Falls area).

AT I P Doc# 382530 00017
Table 2; The Laundering Cycle
Criminal Activity Placement

Drug Production and Trafficking Disposal of bulk cash:
White-collar crime Placement or smurfing schemes of
All other crimes lesser amounts of cash
Playing against another player
Establishing accounts at a casino
Injection of large amounts of cash
Integration Layering
Use layered funds to purchase clean Disguise origin of initial funds through:
legitimate assets: Receipt of casino cheque
Money assets Transfer of funds between casinos
Fixed assets Acquisition of casino chips for
Business subsequent sale to third parties

ATIP Doc# 382530 00018
Suspicious Transaction Indicators

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Any casino transaction of $3,000 or more when an individual receives payment in

casino cheques made out to third parties or without a specified payee.
Client requests a winnings cheque in a third party's name.
Acquaintances bet against each other in even-money games and it appears that
they are intentionally losing to one of the party.
Client attempts to avoid the filing of a report for cash by breaking up the
transaction.
Client requests cheques that are not for gaming winnings.
Client enquires about opening an account with the casino and the ability to
transfer the funds to other locations when you do not know the client as a regular,
frequent or large volume player.
Client purchases large volume of chips with cash, participates in limited gambling
activity with the intention of creating a perception of significant gambling, and
then cashes the chips for a casino cheque.
Client exchanges small denomination bank notes for large denomination bank
notes, chip purchase vouchers or cheques.
Client is known to use multiple names.
Client requests the transfer of winnings to the bank account of a third party or a
known drug source country or to a country where there is no effective anti-
money-laundering system.
Unknown client purchases large volume of chips and leaves to return at a later
date.
Customer cashes multiple Slot Redemption Tickets (TITO) from various dates
and requests a cheque.

AT I P Doc# 382530 00019
Appendix 1: Casinos and Racetracks

Table 3: Casinos
_ , _ l'f{ CASINpS <:.,' : r

BRITISH COLUMBIA SASKATCHEWAN
Billy Barker Casino Quesnel Bear Claw Casino Carlyle
Boulevard Casino Coquitlam Casino Moose Jaw Moose Jaw
Casino Of The Rockies Cranbrook Casino Regina Regina
Cascades Casino Langley Dakota Dunes Saskatoon
Edgewater Casino Vancouver Gold Eagle Casino North Battleford
Gateway Casino Burnaby Burnaby Northern Lights Casino Prince Albert
Great Canadian Casino Holiday Inn Vancouver Painted Hand Casino Yorkton
Great Canadian Casino Nanaimo Nanaimo
Great Canadian Casino P.N.E. Vancouver YUKON
Great Canadian Casino View Royal Victoria Diamond Tooth Gertie's Gambling Hall Dawson City
Lake City Casino Kamioops Kamioops
Lake City Casino Kelowna Kelowna MANITOBA
Lake City Casino Penticton Penticton Club Regent Casino Winnipeg
Lake City Casino Vernon Vernon McPhillips Street Station Casino Winnipeg
River Rock Casino Resort Richmond Aseneskak Casino Opaskwayak
Treasure Trove Casino Prince George South Beach Casino Scanterbury
ALBERTA ONTARIO
Baccarat Casino Edmonton Brantford Charity Casino Brantford
Boomtown Casino Fort McMurray Casino Niagara Niagara Falls
Camrose Resort Casino Camrose Casino Rama Orillia
Cash Casino Calgary Casino Windsor Windsor
Cash Casino Red Deer CNE Casino (seasonal) Toronto
Casino By Vanshaw Medecine Hat Great Blue Heron Charity Casino Port Perry
Casino Calgary Calgary Niagara Fallsview Casino Resort Niagara Falls
Casino Dene Cold Lake Point Edward Charity Casino Point Edward
Casino Edmonton Edmonton Sault Ste. Marie Charity Casino Sault Ste. Marie
Casino Lethbridge Lethbridge Thousand Islands Charity Casino Gananoque
Casino Yeliowhead Edmonton Thunder Bay Charity Casino Thunder Bay
Century Casino Edmonton Western Fair Casino (seasonal) London
Deerfoot Inn & Casino Calgary
Eagle River Casino Whitecourt QUEBEC
Elbow River Inn Casino Calgary Casino de Charlevoix . LaMalbaie
Gold Dust Casino Saint Albert Casino du Lac-Leamy Gatineau
Great Northern Casino Grande Prairie Casino de Montreal Montreal
Grey Eagle Casino Calgary
Jackpot Casino Red Deer NOVA SCOTIA
Klondike Casino (seasonal) Edmonton Casino Nova Scotia - Halifax Halifax
Palace Casino Edmonton Casino Nova Scotia - Sydney Sydney
River Cree Resort & Casino Enoch
Silver Dollar Casino Calgary PRINCE EDWARD ISLAND
Stampede Casino Calgary C. Driving Park Entertainment Center Charlottetown

ATIP Doc# 382530 00020
Table 4: Slots-at-Racetracks
SLOTS-AT-RACETRACKS/SLOTS AT BINGO HALLS

ONTARIO ALBERTA
Ajax Downs Ajax Bully's Sport & Entertainment Ctr. Lethbridge
Clinton Raceway Clinton Evergreen Park Grande Prairie
Dresden Raceway Dresden Northlands Park Edmonton
Flamboro Downs Dundas
Fort Erie Race Track Fort Erie BRITISH COLUMBIA
Georgian Downs Innisfil Chances Gaming Entertainment Cowichan
Grand River Raceway Elora Chances Gaming Entertainment Dawson Creek
Hanover Raceway Hanover Chances Gaming Entertainment Kamioops
Hiawatha Horse Park Sarnia Chances Gaming Entertainment Kelowna
Kawartha Downs Fraserville Chances Signal Point Gaming Williams Lake
Mohawk Racetrack Campbellville Fraser Downs Racetrack & Casino Cloverdale
Rideau Carleton Raceway Gloucester Hastings Park Racetrack Vancouver
Sudbury Downs Chelmsford Play Time Gaming Campbell River
Western Fair Raceway London
Windsor Raceway Windsor NEWFOUNDLAND
Woodbine Racetrack Toronto Twin River Downs Goulds
Woodstock Raceway Woodstock
MANITOBA
Assiniboia Downs Winnipeg
NOTE: Some locations may have VLTs instead of slot machines, and as such are not presently
covered under the PCMLTFA.

ATIP Doc# 382530 00021
Appendix 2: Statistics
Table 5: Casinos by Province (as of January 2008)
Province Casinos : Slots Charity ' > Seasonal [Total

Nation
British Columbia 15 8 0 0 1 24
Alberta 0 3 19 4 1 27
Saskatchewan 2 0 0 5 0 7
Yukon 0 0 0 0 1 1
Manitoba 2 0 0 2 0 4
Ontario 4 17 5 1 2 29
Quebec *.3 0 0 0 " 0 3
Nova Scotia ,2 0 0 0."". 0 2
Prince Edward Island A .0 0 .0 ; 0 1
TO TA L r 29 28 24''> : .;&&-' 5 , 98
Table 6: Games Availability by Province
BC AB SK YT MB ON NT NU QC NB NS PEI NF
Table Games X X X X X X X X,
iSipt Machines X X X X X X X X
Slots at Racetracks xx x x ;x ; i x x.x
V LTs ' % v / XX X xxxxx
Table 7: MOUs with Provincial Regulators (as of January 2008)
Provincei Regulator
British Columbia Gaming Policy Enforcement Branch (GPEB)
Alberta Alberta Gaming and Liquor Commission (AGLC)
Saskatchewan Saskatchewan Liquor and Gaming Authority (SLGA)
Ontario Alcohol and Gaming Commission of Ontario (AGCO)
Nova Scotia Nova Scotia Alcohol and Gaming Authority (AGA)

ATIP Doc# 382530 00022
Appendix 3: Regulators and Operators

Regulator Gaming Policy and Enforcement Branch .(GPEB)
British Columbia http://www.Dssq.qov.bc.ca/aamina/
British Columbia Lottery Corporation (BCLC)
Operator
http://www.bclc.com/
Regulator Alberta.Gaming and Liquor Commission (AGLC)

Alberta ;http://www.aalc.qov.ab.ca/, >-., V-'' . .-
Operators Various
Saskatchewan Liquor and Gaming Authority (SLGA)
Regulator , http.7/www.siqa'.a6v.sk:ca/ _' ; \ \ _/'';. 11 "'" ., ...'.'
Saskatchewan Saskatchewan Gaming Corporation (SGC)
http://www. gov, sk. ca/deptsoras/overviews/?42
Operators Saskatchewan Indian Gaming Authority
http:/Avww.siaa.sk.ca/
Department of Community Services ''y .! ...: ^-'
Yukon Regulator htto:/Avww.aov.vk.<*a/depts/communiW/cbnsumer/lotterv.html
Operator Klondike Visitors* Association
Manitoba Gaming Control Commission (MGCC)
Regulator h t t p : / / w w w. m q c c . ; m b . c a / . , . ' . " . .
Manitoba
Manitoba Lotteries Corporation (MLC)
Operator http://www.mlc.mb.ca/
Alcohol arid Gamiqg Commission of Ontario (AGCO)v ,
Regulator* ' http://aqco.on.ca/ !; * '
Ontario
Ontario Lottery and Gaming Corporation (OLGC)
Operator http://www. olqc.ca/
Regulator Department of Municipal and Community Affairs

Northwest Territories l ! , / ' h r t o / A v w w. m a c a . o o v. n t . c a / ; ! , j u
Operator None
Department of Community and GovernmentServices
Nunavut 'Regulator h t t p y / w w w. ' q o v. n u ' f c a / N u r i a v u V ! !
Operator None
; ' ., - .' i"i(. Regie deslalcools, des courses etdesjeux" V' ','-'. ",.
Regulator h t t p : / / w w w . r a c i . q o i i v. a c . c a / V _ ' _ : ~ , ' ? . . . . . . '
Quebec Loto-Quebec
http://www.loto-quebec.com/
Operator Societe des casinos du Quebec
http://www.societe-des-casinos.com/
Departmental Finance - Lotteries Commission ~
New Brunswick Regulator h t t p : / A v w w. q n b . c a / 0 0 2 4 / : . ; : .
Operator None
Attorney General - Consumer, Corporate & Insurance
Regulator Division 'iV , ,,,;,.
Prince Edward Island http://www.qov.pe.ca/oaq/ccaid-info/
Operator None
Nova Scotia Alcohol and Gaming Authority (AGA)
Regulator http:/Avww.qov. ns.ca/aqa/
Nova Scotia
Nova Scotia Gaming Corporation (NSGC)
Operator
http://www.qaminqcorp.ns.ca/
Department of Government Services
Regulator http://www:qov:nl.ca/qs/cca/tpl/lottdries.stm
Newfoundland
Operator None

ATIP Doc# 382530 00023
Appendix 4: Legislative Requirements for Casinos

(including changes that come into effect on June 23, 2008)
Proceeds of Crime Proceeds of Crime (Monev

Suspicious Transaction
(Money Launderinq) and Launderinq) and Terrorist
Terrorist Financinq Act Reportinq Requlations
Financinq Requlations
Section 2, 3 & 4
Electronic Funds Transfer Subsection 9(1) Subsection 5(1)
Section 40
Sections 9 & 11
Suspicious Transaction Section 7 Subsections 12(1) & (2) Section 4
Reports
Schedule 1
Section 2, 3 & 4
Subsection 5(2)
Large Cash Transaction Section 40
Subsection 9(1)
Reports Subsection 52(1) & (3)
Section 10
Terrorist Property Section 11 (exemption)
Section 7.1
Reports Subsection 12(3)
Schedule 2
Section 1 (definitions)
Sections 8 & 9
Sections 41, 42, 42.1,43 &
44
Subsection 52(2)
Section 53
Record Keeping, Client Section 60
Section 6 Subsection 62(1)
Identification and Third Section 12.1
Section 6.1 Section 63
Party Determination
Section 64
Section 64.1
Sections 65, 66, 66.1,67,
68, 69 & 70

ATIP Doc# 382530 00024
Appendix 5: Useful Links
Publications
Canadian Gaming News
http://www.canadiangaming.com/news
Canadian Gaming Business

http://www.canadiangamingbusiness.com
Associations
Canadian Gaming Association

http://www.canadiangaming.ca
North American Gaming Regulators Association (NAGRA)
http://www.nagra.org
American Gaming Association
http://www.americangaming.org
The International Association of Gaming Regulators
http://www.iagr.org
Global Gaming Expo (G2E)

http://www.globalgamingexpo.com
Other Links
Canada West Foundation - Gambling in Canada Reports

http://www.cwf.ca/abcalcwf/doc nsf/file/E32BC240BFE6B9EA87256F6D0051669 l/Sfile/gambling.htm
Gambling Glossary
http://www.thegoodgamblingguide.co.uk/glossary.htm
Casino Guide
http://www.casinoguide.ws/canada.html
Casino City
http://www.casinocitv.com/
500 Nations - First Nations Casinos
http://www.500nations.com/indian casinos.asp
Horsing Racing Tracks in Canada
http://www.ildado.com/horse racing tracks canada.html

AT I P Doc# 382530 00025
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Sector: Casino
1-Background and Sector Overview

Definition of sector under the PCMLTFA
For the purposes of the Proceeds of Crime (Money Laundering) and Terrorist Financing
Act and Regulations, "Casino" means a person or entity that is licensed, registered,
permitted or otherwise authorized to do business under any of paragraphs 207(1 )(a) to
la) of the Criminal Code and that has an establishment
that the person or entity holds out to be a casino and in which roulette or card games
are carried on; or
b) where there is a slot machine, which, for the purposes of this definition, does not
include a video lottery terminal.
It does not include a person or entity that is a registered charity as defined in subsection
248(1) of the Income Tax Act and is licensed, registered, permitted or otherwise
authorized to carry on business temporarily for charitable purposes, if the business is
carried out in the establishment of a casino, for not more than two consecutive days at a
time under the supervision of the establishment.
Currently, only 2 reporting entities, British Columbia Lottery Corporation and Lotto Quebec offer
online gaming activities.
The casino sector has been covered under the PCMLTFA since 2000.
Size and segmentation
The Casinos sector has 39 REs with 109 locations in 9 provinces and 1 territory.
The Canadian Gaming Association reports that the gaming industry contributes $15.3 billion to
the economy directly, with most of this revenue ($8.6 billion or 57 per cent) going to government
programs and services, as well as to charities. It is important to note that the RE turnover rate is
non-existent.
2
RDIMS # 300699 00002
ATIP RDIMS 348600
PROTECTED B
Province Segment Segment Segment Segment Total

"A" "B" "C" REs
"D" Locations
Alberta - 24 3 2 29 23
Saskatchewan - 7 - - 7 2
Yukon - 1 - - 1 1
Manitoba - 4 - - 4 3
Ontario 4 6 17 2 29 4
Quebec 4 - - - 4 1
Nova Scotia - 2 - - 2 1
New Brunswick * 1 1 1
Prince Edward Island - 1 - - 1 1
TOTAL 12 59 33 5 109 39
* Casino New Brunswick is a new casino in this sector and has been in operation since May
2010. New Brunswick Lotteries and Gaming Corporation is the reporting entity and Sonco
Gaming New Brunswick Limited Partnership also known as Casino New Brunswick is an
operator/service provider.
The casino sector is comprised of 4 segments
Group A: Full service casinos offering slots, table games and credit/front money accounts.
(Represents 11.0% of all locations)
This segment incorporates all casinos that operate slots and tables including credit and front
money accounts. Casinos in this segment are the most likely to encounter the most instances of
having to meet FINTRAC's legislative requirements such as record keeping, client ID, third party
determination and reporting
Group B: Full service casinos offering slots and table games (represents 54.1% of all
locations).
This segment incorporates all casinos that operate slots and tables but do not offer credit/front
money accounts. Casinos offering both slots and tables are likely to encounter the most instances
of having to meet FINTRAC's legislative requirements such as record keeping, client ID, third
)arty determination and reportinc *=*.--'.--...
Group C: Racinos - Slots and Charity Casinos with slots only (represents 30.3% of all
locations).
This segment incorporates casinos that only have slot machines. Traditionally, the average slot
players do not meet the thresholds for LCTRs therefore do not trigger FINTRAC's legislative
ra^jementûcj*asrecoraJ<^^ ID, third party determination and reporting Will
RDIMS # 300699 3
ATIP RDIMS 348600
00003
PROTECTED B
Group D: Seasonal (represents 4.58% of all locations)
This segment incorporates casinos that are not permanently established throughout the year.
Casinos in this segment only operate for short periods during the year such as during a fair or an
exhibition. These temporary casinos are normally limited to table games with very low maximum
betting limits which makes this segment very unlikely to reach record keeping, client ID and
reporting requirements.
Governance and MOU
The Criminal Code of Canada delegates the authority to oversee licensed gaming activities to the
provinces. Each province sets its own gaming policies that are administered by provincial
commissions or authorities. (See appendix A - Regulatory environment details)
2- Sector in Review (last 3 years)
Compliance Relations and Support
Given the relatively small size of this sector, guidance has been often provided on a one on one
basis as required. Reporting Entities are all familiar with their FINTRAC regional officer and
information is shared regularly.
1. Feedback presentations are shared with larger casinos once a year in order to ensure
they continue to meet their obligations while increasing the quality of the information
(reports) they provide to FINTRAC.
2. All casinos in this sector have been consulted at various stages in regards to the
development of the Casino Disbursement Report (CDR) and the related guideline which
came into force September 28, 2009.
3. The Director gave a speech at the Canadian Gaming Regulators Association (CAGRA)
annual conference in 2009.
4. A FINTRAC officer presented at Canadian Association of Casino Security Directors

(CACSD) conference in May 2009.
5. A FINTRAC officer participated, in and gave FINTRAC updates at, CAGRA annual
conferences in 2006 and 2007.
Compliance Enforcement
1-Enhanced Monitoring and Assessments of Reporting
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3-Compliance Self Assessments and Declarations:
CARs
Below are the statistics regarding the Compliance Questionnaires that were sent in this sector.
The CQs (all paper based) were sent in 2004.
para. 16(1)(c)ATIA
para. 16(1 )(c)ATIA
After analysis of the answers, the percentages on the compliance regime elements (% of REs
that meet the criteria) compared to the average of all sectors are as follows:
VSDONC
The number of voluntary self declarations of non-compliance for the Casino sector is shown in the
chart below:
4-Penalties and Non-Compliance Disclosures
ANIPs:
para. 16(1 )(c)ATIA
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Non-Compliance disclosures:
para. 16(1 )(c)ATIA
5-Other
A FINTRAC Casino sector strategy was implemented and it focused on a strategy to maximize the
detection and deterrence of money-laundering and terrorist financing in the Casino Sector. The
Centre also recently completed a Trends and Typologies report for this sector.
para. 16(1 )(c) ATI A
3- Compliance Expectations
Likelihood of Non-Compliance
The likelihood of non-compliance is based on the overall compliance history, awareness and
control measures in place.
Considering the elements o, jno sector

has been determined to be:
Consequence of Non-Compliance
The consequence of non-compliance in this section is based on sector knowledge and review of
the following key intelligence items (see appendix C for additional details):
Royal Canadian Mounted Police (RCMP) report on vulnerabilities in the casino sector in
Canada.
Asia Pacific Group (APG) and Financial Action task Force (FATF) working group on
typologies - Report on ML/TF Vulnerabilities of Casino and Gaming Sector.
Financial Task Force Third Mutual Evaluation on Anti-Money Laundering and Combating
the Financing of terrorism - Canada (February 2008)
FINTRAC 2007/2008 Case Disclosure overview (RDIMS# 174282)
FINTRAC Money Laundering Typologies and Trends in Canadian Casinos
Considering the elements of appendix C, the size of the sector and the sensitivity to ML/TF, the
consequence of non-compliance for the Casinos sector has been determined to be:ffij:
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APPENDIX A - REGULATORY ENVIRONMENT
Regulators are provincially established and are mostly present for their gaming oversight. Some
regulators do incorporate an ML/TF component to their reviews but the depth varies greatly by
province. In addition, the Canadian Gaming Association (CGA) publicly represents Canada's
gaming industry and sets out the following objectives:
Serve as the industry's national information source by providing accurate gaming

industry data.
Develop industry wide programs and approaches for critical issues such as responsible
gaming.
Address legislative and regulatory issues affecting our members their employees and
customers.
Provide leadership on emerging issues
British Columbia
In British Columbia, the Gaming Policy and Enforcement Branch (GPEB) of the Ministry
of Housing and Social Development is responsible for policy and legislation, standards,
regulation, licensing, registration, distribution of gaming proceeds and enforcement for all
sectors of gaming.
The British Columbia Lottery Corporation (BCLC) conducts and manages table games,
making the Corporation responsible for all commercial and community casino gaming,
with the exception of the one at the Pacific National Exhibition which runs for two weeks
under an agricultural fair permit.
An MOU is in place with GPEB who conducts examinations on all BC casinos annually in
addition to completing a review of BCLC.
o All Compliance efforts are discussed with GPEB, including strategies on
examinations, discussing findings and on-going compliance issues
o Findings from GPEB exams of BCLC are risk-assessed to help in planning of
FINTRAC exams of BCLC
o Ongoing meetings with GPEB Compliance staff ensure planning and organizing
of BCLC exams are done in the most effective and efficient manner
Alberta

The Alberta Gaming and Liquor Commission (AGLC) is primarily concerned with
licensing casinos and ensuring that the operators meet certain operational and legislative
requirements. The commission issues two types of licenses: one to the casino operator
and the other to the registered charity.
There are 8,000 charities in Alberta. Each year, 180 of them are permitted to operate a
charity gaming operation in each of the casinos for a period of not more than 2 days.
Volunteers within the charity run the casino cash cage and each charity hires, on a
private contract, an advisor to oversee the cage operations. There are also four first
nations casinos, with the first nations band that runs each casino being the "charity" as
well.
An MOU is in place with the AGLC who provides a brief PCMLTFA checklist for each
audit they conduct and they audit every casino at least once a year. This checklist has
been last amended in 2006 at the request of FINTRAC. The checklists themselves are
akin to a compliance questionnaire and the answers are believed to be taken at face
value (i.e., they do not validate the responses provided by the casino compliance officer.)
o All Compliance efforts are discussed with AGLC, including strategies on
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Ongoing meetings with AGLC Compliance staff ensure planning and organizing
of Alberta casino exams are done in the most effective and efficient manner
Saskatchewan
The Saskatchewan Liquor and Gaming Authority (SLGA) regulates the gaming industry in
Saskatchewan. It provides regulatory, educational and support services to licensees and
gaming suppliers.
For the five First Nations casinos in the province, the SLGA works in collaboration with
the Saskatchewan Indian Gaming Authority (SIGA).
The Saskatchewan Gaming Corporation (SGC) and SIGA operate the permanent casinos
in the province.
An MOU is in place with SLGA who only advise if they become aware of non-compliance
incidental to their own reviews.
o All Compliance efforts are discussed with SLGA, including strategies on
o Ongoing meetings with SLGA Compliance staff ensure planning and organizing
of Saskatchewan casino exams are done in the most effective and efficient
manner
Manitoba
The Manitoba Gaming Control Commission (MGCC) regulates gaming activities in the
province. However, the MGCC is primarily responsible for gaming registration and video
lottery terminals, and has limited audit and oversight powers with regard to Manitoba
casinos.
The Manitoba Lotteries Corporation (MLC) is the crown corporation of the provincial
government answering to the Minister responsible for lotteries. It operates and manages
the two casino properties in Winnipeg: Club Regent Casino and McPhillips Street Station
Casino.
Manitoba also has two First Nations casinos that are run independently from the MLC.
Ontario
The Alcohol and Gaming Commission of Ontario (AGCO) regulates the gaming industry
in Ontario. It establishes compliance models for Ontario casinos, approves internal
control manuals, conducts inspections and forensic investigations and registers gaming
floor supervisors and casino suppliers.
province's charity casinos and slots-at-racetracks, and also contracts out management of
the commercial casinos to private operators.
An MOU is in place with the AGCO. In July 2009, a pilot project was initiated to enhance
the existing relationship and broaden the "compliance net" on Ontario casinos. The pilot
project consisted of numerous commitments on the part of both FINTRAC and AGCO
including:
o Observing each agency's respective compliance activities to better understand
processes and minimize duplication of effort,
o Copying each agency on communications with Ontario casinos regarding AML
compliance.
o Periodic meetings to provide relevant strategic information on compliance
examinations.
By all accounts, the pilot project has been a success and both agencies have agreed it
will continue on a permanent basis. a
o AGCO staff have observed FINTRAC's casino examinations and FINTRAC staff
have observed AGCO's casino inspections. This has resulted in greater
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consistency and transparency from both agencies with regard to enforcing AML
compliance in Ontario casinos.
Regular meetings are held between FINTRAC and AGCO to discuss audit plans
and priorities.
The depth and scope of the compliance information being provided to FINTRAC
by AGCO has improved dramatically since the pilot project started.
Quebec
The Regie des alcohols, des courses et des jeux (RACJ) regulates the types of games
that can be played in Quebec casinos. Also it has the power to deliver, suspend or
revoke the licenses of casinos and charity casinos. Societe des casinos du Quebec takes
care of the hiring and the training of employees.
Nova Scotia
The Nova Scotia Alcohol and Gaming Authority (NSAGA) is a licensing authority for
liquor, gaming and amusements, and also regulates liquor, gaming, and amusements
activity for which licenses have been issued.
A private operator runs the province's two casinos on behalf of the Nova Scotia Gaming
Corporation (NSGC).
An MOU is in place with the NSAGA. They have not conducted any examinations and no
examinations are planned.

Consumer Services, Office of the Attorney General, is responsible for charitable gaming.
The department has the responsibility to administer and regulate charitable gaming as a
result of the Lieutenant Governor in Council of the province having issued an order
pursuant to Section 207(b) of the Criminal Code of Canada. That order is called the
Lottery Schemes Order.
Gaming regulators in Canada are loosely represented by the Canadian Association of Gaming
Regulators (CAGRA), which is affiliated to the North American Gaming Regulators Association
(NAGRA) in the United States. The Canadian association is an informal group with no
established offices or physical structure. Their purpose is to bring together agencies that regulate
gaming activities and provide them a forum for the mutual exchange of regulatory information and
techniques, collecting and disseminating regulatory and enforcement information, procedures,
and experiences from all jurisdictions and provide on-going gaming education and training for all
members. Members responsible for organizing meetings and conferences change from year to
year on a voluntary basis.
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APPENDIX B - RESEARCH SUPPORTING THE LIKELIHOOD OF NON

COMPLIANCE
Each segment/group identified in the stratification section of this document have been assessed
for their likelihood of Non-Compliance. When determining the likelihood of Non-Compliance, the
following items have been reviewed for each segment/group identified within the sector:
Range of issues
Group A: Casinos with slots and tables who offer credit/front money accounts.
Examination results to date (FINTRAC and/or requlator):
Data Qualitv;
para. 16(1 )(c)ATIA

Likelihood of Non-Compliance for this segment has been determined to be:
Group B: Casinos with slots and tables (without credit/front money accounts)
Awareness
Data Quality: para. 16(1)(c)ATIA

para. 16(1)(c)ATIA
Group C: Racinos (Slots and Charity Casinos with slots only).
Examination results to date (FINTRAC and/or regulator):
Awareness
Data Qualitv: para. 16(1 )(c)ATIA
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para. 16(1 )(c)ATIA

Group D: Seasonal
Examination results to date (FINTRAC and/or requlator): para. 16(1 )(c)ATIA
Awareness: para. 16(1)(c)ATIA
Data Qualitv: para. 16(1)(c)ATIA
Likelihood of Non-Compliance for this segment has been determined to be: jjjjkML
Control Measures
Requlator
Regulator involvement in regards to Money Laundering and Terrorist Financing varies
from province to province. Most regulators have a primary mandate of ensuring fair
gaming in casinos. Some regulators do conduct high level PCMLTFA compliance
reviews. para. 16(1 )(c)ATIA
Associations
The Canadian Gaming Association includes various members such as reporting entities,
casino operators, and gaming industry suppliers. Their mandate includes items such as
jaming industry issues and responsible gaming. ET
Processes and controls
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APPENDIX C - RESEARCH SUPPORTING THE CONSEQUENCE OF Wft-

COMPLIANCE "
Consequence of Non-Compliance in regards to the detection and deterrence of Money
Laundering and Terrorist Financing has been determined by reviewing the following criteria:
SIZE
According to the most recent statistics (2006) published by the Canadian Gaming Association,
the gaming industry in Canada generates annual revenues of $15.4-billion, of which $8.7-billion
goes to governments and charities with the other $6.7-billion going to sustain gaming operations
(wages and salaries, infrastructure costs and profits).
Canada's gaming industry also employs approximately 267,000 people.
BUSINESS RISKS
Products and services
Each casino conducts thousand of cash transactions every day as 95% of funds entering
and leaving casinos are in cash form. Once completed, these transactions leave little or
no paper trail. Casinos will only accept cheques and bank drafts for selected high roller
clients which represents a small portion of their clients (less then 1%). Most casinos offer
foreign exchange but this does not usually represent a large portion of their business.
An overview of FINTRAC's case disclosures indicates that of the 210 ML/TF disclosures
made by FINTRAC in 2007/2008, 20.6% of the cases included reports generated from
transactions conducted at casinos. Furthermore, 25 of these cases contained suspicious
transactions conducted at casinos.
The number of services offered is considered to be small. The following is a list of
common services: Slot machine play, table games, foreign exchange, bill breaking, Visa
cash advances, front and credit accounts.
Delivery Channels:
para. 16(1 )(c)ATIA
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Geographic Locations of REs:
The casinos sector in Canada is still considered to be a growing industry as the number
of casinos continues to increase. Casinos are generally located in areas of high tourism
and/or areas of large population. Ontario, British Columbia and Alberta have the largest
presence as far as number of locations is concerned.
Type of Business Relationships Maintained with Clients:
Other relevant factors:
Analysis on reporting STRs & LCTRs:
para. 16(1 )(c) ATI A
PERCEIVED IMPORTANCE
Value:
The Canadian Gaming Association reports that the gaming industry contributes $15.3 billion to
the economy directly, with most of this revenue ($8.6 billion or 57 per cent) going to government
programs and services, as well as to charities. It is important to note that the RE turnover rate is
non-existent.
Media:
The casino sector has been the target of numerous media reports over the last 2 years bringing a
spotlight on the overall risk for casinos to be used by criminals to launder proceeds of crime.
Disclosures:
The number of cases disclosed by FINTRAC that include transactions at Canadian casinos
increased significantly in 2008-2009, keeping pace with the overall increase in the number of
cases disclosed. In 2008-2009, FINTRAC disclosed 112 cases which included transactions in the
casino sector, compared with 43 cases disclosed in 2007-2008. This represents 20% of the total
number of cases disclosed by FINTRAC, which is the same percentage as observed in 2007-
2008.
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Percentage of Cases Involving the Use of

Different Sectors and/or Services in 2008-2009
20%
12%
4% V

ney Law r;rms Internet Prepaid
Service Payment Card
Systems Providers
Accounts
Sectors and/or Services
All of the 112 cases involving the casino sector were associated to suspected money laundering
activity. Five of these cases were also suspected to be related to terrorist activity financing and/or
threats to the security of Canada.
The following table describes the most common predicate offences related to FINTRAC case
disclosures involving the casino sector. Drug-related activity was most commonly observed,
followed by various types of fraud.
Number of Case Disclosures

Predicate
Involving Transactions at Canadian Details
Offences
Casinos
49% Drugs 39% Distribution of various drugs including
heroin, MDMA and methamphetamine
23% Distribution of cocaine
15% Production of various drugs including
hashish and synthetic drugs
12% Distribution of marijuana
112 15% Fraud 40% Unknown fraud
24% Investment/securities fraud
12% Credit/debit card fraud
12% Telemarketing fraud
12% Loan sharking
47% Other offences, including theft, human trafficking,
cigarette smuggling and corruption.
For additional information:

http://www.fintrac-canafe.qc.ca/publications/typoloqies/2009-11 -01 -enq.asp
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.
CASINO SECTOR REPORT
Maximizing the Detection and Deterrence Of
Money Laundering and the Financing of
Terrorism in the Casino Sector
Report prepared by:

Denis Meunier and Richard Kodybka
May 3, 2010
FINTRAC ^S CANAFE
Financial Transactions and f Centre d'analyse des operations
Reports Analysis Centre of Canada > et declarations financieres du Canada
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TABLE OF CONTENTS
EXECUTIVE SUMMARY 4
1. INTRODUCTION 7
7.7 Issue 7
1.2 Purpose and Context 7
1.3 Scope 8
1.4 Consultations and Steering Committee 8
2 . B A C K G R O U N D : R E S P O N S I B I L I T I E S A N D A C C O U N TA B I L I T I E S 1 0
2.7 Anti-Money Laundering / Combating the Financing of Terrorism (AMUCFT) (formerly the National Initiative to
Combat Money Laundering (NICML)) 10
2.2 FINTRAC and Legislative Requirements 10
2.3 Provincial Regulators 14
2.4 FINTRAC and Provincial Regulators - Memoranda of Understanding 17
2.5 Casinos as Reporting Entities (REs) 17
2.6 Police forces 18
3. CASINOS: THE ENVIRONMENT 19

3.1 Canadian Casinos - Structure and Operations 19
3.2 Recent Media Attention 19
3.3 The RCMP Report (Criminal Trend Assessment - Project STREAK - Money Laundering in Casinos:
A Canadian Perspective) 20
3.4 Asia Pacific Group (APG) and Financial Action Task Force (FATF) Working Group on Typologies-
Report on ML/TF Vulnerabilities of Casinos and Gaming Sector (February 2009) 21
3.5 Financial Action Task Force Third Mutual Evaluation on Anti-Money Laundering and
C o m b a t i n g t h e F i n a n c i n g o f Te r r o r i s m - C a n a d a ( F e b r u a r y 2 0 0 8 ) 2 2
4. CANADIAN CASINOS: A N A LY S I S AND DISCUSSION 24

4.7 Overview of Casino Sector Compliance Examinations Conducted September to November 2008 by
FINTRAC 24
4 . 2 Vo l u m e t r i c s - R e p o r t i n g Tr e n d s o f L C T R s a n d S T R s b y P r o v i n c e 2 5
4.3 STR - Quality and Va l u e - A d d e d 34
4.4 Matching of STRs - Casino and Non-Casino Reporting Entities 37
4.5 Voluntary Information Records (VIRs) 38
' * 41
4 . 7 B r i n g i n g I n f o r m a t i o n To g e t h e r f o r C o m p l i a n c e , M L a n d T F P u r p o s e s 4 1
4.8 Stakeholder Consultations - Perspectives and Input 43
4.9 Disclosures Involving Reports from Casinos 46
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5. ISSUES AND PROPOSED ENHANCEMENTS 47

5.1 Reporting Trends and Volumes 48
5.2 Quality of Reporting 49
b. 3 Analysis of VIRs, f$t| Case Disclosures and Sharing of Information 50
5.4 Stakeholder Perspectives and Input 50
5.5 On-Line Gambling and Illegal Casinos 51
6. CASINO SECTOR-TWO KEY I N I T I AT I V E S 52

6.1 Enhancements to FINTRAC's Internal Operational Capacity 52
6.2 Proposal for a National Casino Sector Initiative 53
7. NEXT STEPS 57
LIST OF TABLES
Table 1: Provincial/Territorial Distribution of Casinos by Type and Corresponding Reporting Entities Subject
to the PCM7771 18
Ta b l e 2 : S T R s S u b m i t t e d b y a l l C a n a d i a n C a s i n o s - 2 0 0 2 t o 2 0 0 8 2 1
Ta b l e 3 : R e p o r t i n g Vo l u m e s a n d T r e n d s o f L C T R s a n d S T R s b y P r o v i n c e 2 5
Table 5: Total Number of STRs Filed by Casinos and Non-Casino Sectors from 2002-2008 38
S. 16(1 )(c)& 21(1 )(a),(d)ATIA
LIST OF FIGURES
S. 16(1 )(c)& 21(1 )(a),(d)ATIA 35
Figure 2: Percentage of Casino STRs Filed by Province from 2002-2008

Where Individual Conducting the Transaction is Not Recorded in PartD 36
APPENDIX
S. 16(1 )(c)& 21(1 )(a),(d) ATIA
. 58
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Executive Summary
Notice
The authors of this report wish to emphasize that by no means is it implied in this report that the casino sector in Canada
condones or is an accomplice to any criminal activity taking place on casino premises. Rather, the cash intensive nature
of the casino business, coupled with the variety, frequency and volume of transactions, all contribute to the sector being
vulnerable to money laundering and terrorism financing (ML/TF).
Overview
The casino sector has received considerable attention both nationally and internationally over the past few years as one
of the sectors identified globally as vulnerable to ML/TF. More specifically, FINTRAC has observed that reports and
situations occurring over the past two years in the casino sector internationally, and in Canada, have pointed to the need
for further study and actions to maximize the detection and deterrence of ML/TF in the Canadian casino sector.
Hence, this report was prepared with the purpose of identifying enhancements for maximizing the detection and
deterrence of ML/TF in the Canadian casino sector.
Research and analysis was conducted to identify and better understand the issues and challenges associated with
detecting and deterring ML/TF in the casino sector, as well as putting them into proper context. In this regard, the
research and analysis undertaken for this report was multi-faceted insofar that it was not confined to one Directorate or
Sector within FINTRAC or to FINTRAC alone, but also sought information and commentary through consultations with
other stakeholders and partners, as well as obtaining information produced by international organizations, provincial
governments, police, other law enforcement, the casino sector, and news media reports. The research was conducted
from January 2009 until June 2009 and represented the situation researched up until that time.
As a result of this research and analysis twenty-four suggestions for enhancement have been made. These suggested
enhancements have been grouped into one comprehensive approach involving two proposed initiatives. They are:
i) Enhancements to FINTRAC's Internal Operational Capacity, and
ii) Proposal for a National Casino Sector Initiative.
It should be understood that time did not stand still from the time the research was concluded in June 2009. Informed by
some of this research and analysis, by initiatives undertaken by various Sectors and Directorates within FINTRAC
(mostly the Regional Operations and Compliance(ROC) Directorate), dynamic changes in the relationship with casino
REs and casino regulators, the implementation of the new casino disbursement report, and many other factors,
FINTRAC continued to enhance its detection and deterrence capability.
In fact, in 2009-10 there has been considerable interaction between FINTRAC and the casino sector as a whole.
FINTRAC has met with all regulators with whom it has MOUs. sharing not only the results of its examinations but looking
for better ways to collaborativeiy,2^^^^||^|H^HH||^HH|HB|H|||||^^|HHH||^HH||. The
Director presented at the Canadian Gaming Regulators Association's (CAGRA) Conference in Halifax in the summer of
2009 outlining FINTRAC's concerns with respect to compliance in the casino sector of which both the regulators and the
gaming industry itself took notice. FINTRAC's messaging in 2009-10 has also been very clear. FINTRAC now has the
capacity to utilize administrative monetary penalties (AMPs) and will not hesitate to do so where appropriate. ROC
continued on a cyclical examination schedule completing fulsome examinations of entities not reviewed previously
(including enhanced reviews of reports off site) and followed up on findings for those entities already reviewed. ROC is
still finding some gaps in record keeping and training but there is evidence that these gaps are closing. There was also a
significant effort made to consult with the entire gaming community in advance of the implementation of casino
disbursement reporting (CDR) in the fall of 2009. As CDRs are filed, FINTRAC's approach has been to adopt a zero
tolerance to errors or omissions, and in such cases the CDRs have been returned for correction to ensure that there is
no opportunity to develop ineffective reporting practices. Finally, after additional consultation, a trends and typologies
document outlining vulnerabilities within the casino sector was released in November 2009. This report should further
assist casinos in broadening their training materials and developing more encompassing mitigation strategies for their
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risk-based approach. Developments have also occurred in the casino sector itself in early 2010 where several provinces
have announced their intention to launch on-line poker gaming. The sector continues to evolve as does the need for
FINTRAC to keep pace with these developments.
Enhancements to FINTRAC's Internal Operational Capacity
This first proposed initiative involves building on current foundation and implementing ten suggested enhancements focused
on FINTRAC's internal operational capacity at detecting and deterring ML/TF in the casino sector. The key areas identified
for proposed enhancements are the following:
Ensuring better quality of STR reporting by many casino REs as they relate to Parts D andGo\ the STR;
Considering research, monitoring and analysis of reporting trends in the casino sector, especially in regards to
significant variations in the volume of STRs and LCTRs;
Engaging in the analysis of casino-related voluntary information records (VIRs) received from police and rules-based
disclosures involving casino reports;
- Greater sharing of information of FINTRAC analyses within FINTRAC and with partners;
Considering the feasibility of conducting more frequent examinations of at-risk casinos;

Exploring alternative compliance examination methods; and
Increasing the priority given by FINTRAC to the detection of ML/TF cases in the casino sector.
Proposal for a National Casino Sector Initiative
The second proposed initiative, grouping the remaining fourteen of the twenty-four proposed enhancements, calls for a
national coordinated effort involving key partners and stakeholders who have an operational, policy and/or legislative
involvement in maximizing the detection and deterrence of ML/TF in the casino sector. These partners include (but are
not limited to) FINTRAC, provincial regulators, casino REs, police, other law enforcement, the Department of Finance,
the Department of Justice (DoJ), the Public Prosecution Service of Canada (PPSC), provincial Crown prosecutors and
the Canada Revenue Agency (CRA). The Proposal for a National Casino Sector Initiative is built on five strategic
priorities. Key areas of proposed consultation/engagement for action are as follows:
Suggesting research by casino REs on the risk of ML/TF posed by high-rollers and frequent high value players;
Considering periodic meetings between police and FINTRAC's Financial Analysis and Disclosures Directorate
(FADD) to share specific results in the casino sector and receive feedback on related disclosures;
Proposing the initiation of a forum with partners and stakeholders to discuss trends and typologies in the casino
sector, buildina on FINTRAC's latest tvpoloqies report in the casino sector:
S.21(1)(a),(d)&16(1)(c)ATIA
Encouraging casino REs to opt for a batch reporting system; and

S.21(1)(a),(d)&16(1)(c)ATIA

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The fourteen proposed enhancements noted in this report have been grouped into five strategic priorities to form a
National Casino Sector Initiative proposal. The strategic priorities are: 1) Enhanced Legislation, Regulation and Policy, 2)
Enhanced Compliance, 3) Enhanced Detection and Analysis, 4) Enhanced Enforcement, and 5) Proactive
Communications. Fixwnthisarou^ enhancements under the five strategic priorities, a consultation
document, ^ ^ ^ ^ | ^ ^ & K u ^ fl ^ 9 | ^ y 9 H H ^ | | | | ^ | ^ | | | | ^ ^ | | | | | | was
serve as a rKusSorKlocume^^
In February 2010, a draft report was submitted to a Joint Meeting of the PPC and OMC for overall direction and
consideration. Some changes were recommended to the report and it was agreed that a template would be circulated
identifying the Office of Primary Interest (OPI) and the Office of Collateral Interest (OCI), the proposed actions,
timeframes and the anticipated impact of each proposed suggestion. It was also agreed that the overall coordination of
the suggestions contained in this report would be monitored through a joint Policy and Planning Committee (PPC) and
Operational Management Committee (OMC) meeting but that individual suggestions, would be tracked either through the
PPC or the OMC depending on their nature.
Next Steps
Once the templates assessing the impact of each suggestion are completed, and workplans developed, the PPC/OMC
joint Committee meeting is to review and recommend next steps.
It is envisaged that Annex A would be shared with the Department of Finance for their comment. The comments would
be reviewed andI shared;^ththeMntPPC/OMC C(*nrjnitteeme^^ and determination with the view of
sharing theg^^|flQy9Q^^Q9QgH|I^B with other key AML/CFT partners to solicit
feedback, toenâgeuiemoiHnes^ of feasible enhancements.

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1. INTRODUCTION
1.1 Issue
Among the dozen or so business sectors now identified globally as vulnerable to money laundering and the financing of
terrorist activities, the casino sector has received increased attention both nationally and internationally in 2008-09 for
continuing perceived vulnerability to money laundering and the financing of terrorist activities.
Various reports and actions in the last two years on the casino sector internationally, and in Canada specifically, have
pointed to the need for further study and the development of a more comprehensive approach to maximize the detection
and deterrence of money laundering and the financing of terrorist activities in the casino sector. The reports and actions
include; 2008 news media reports about potential money laundering in Canadian casinos, a report (confidential) by the
Royal Canadian Mounted Police (RCMP) on vulnerabilities in the casino sector in Canada, a report from the Asia Pacific
Group (APG) on casinos and money laundering, the Financial Action Task Force's (FATF) Mutual Evaluation Report of
Canada's anti-money laundering and combating the financing of (AML/CFT) regime, and an increased compliance
examination program of Canadian casinos by the Financial Transactions and Reports Analysis Centre of Canada
(FINTRAC).
The authors of this report wish to emphasize that by no means is it implied in this report that the casino sector in Canada
condones or is an accomplice to any criminal activity taking place on casino premises, but rather the cash intensive
nature of the casino business, coupled with the variety, frequency and volume of transactions, all contribute to the sector
being vulnerable to money laundering and the financing of terrorist activities.
1.2 Purpose and Context

The purpose of this report is to identify enhancements to maximize the detection and deterrence of money laundering and
the financing of terrorist activities in the Canadian casino sector. This comprehensive approach involves two proposed
initiatives:
1. Enhancements to FINTRAC's Internal Operational Capacity - FINTRAC will explore internal actions to enhance
operational capacity at detecting and deterring money laundering and the financing of terrorism in the casino sector.
2. Proposal for a National Casino Sector Initiative - To be successful in better detecting and deterring ML/TF in the
casino sector, it is important to engage the partners and stakeholders who have an operational, policy and/or
legislative role in the implementation of a coordinated National Casino Sector Initiative. These key
partners/stakeholders include (but are not limited to) FINTRAC, provincial regulators, casino reporting entities (REs),
police forces, the Department of Finance, the Department of Justice (DoJ), the Public Prosecution Service of
Canada (PPSC), provincial Crown prosecutors and the Canada Revenue Agency (CRA).
As a necessary first step to developing a comprehensive approach, it was essential to undertake some research and
analysis to identify and comprehend the issues and challenges associated with detecting and deterring money
laundering and the financing of terrorist activities in the casino sector, as well as putting them into proper context.
Background information relating to responsibilities and accountabilities vis-a-vis various legislations and regulations were
also reviewed. In this regard, the research and analysis undertaken for this report was multi-faceted insofar that it was
not confined to one Directorate or Sector within FINTRAC or to FINTRAC alone, but also sought information and
commentary through consultations with other stakeholders and partners, as well as reviewing information produced by
international organizations, provincial governments, the casino sector, and news media reports. The research covered
the period of January 2009 to June 2009.

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1.3 Scope
Unless otherwise stated, all issues covered in this report relate to casinos within the context of the current Canadian
legislation - the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCML TEA). The focus is therefore
on casinos as defined in the PCML TEA and its regulations, specifically commercial casinos, charity casinos, racinos and
First Nations casinos. The PCML TFA defines casinos as: "A person or entity that is licensed, registered, permitted or
otherwise authorized to do business under any of paragraphs 207(1) (a) to (g) of the Criminal Code and that conducts its
business activities in a permanent establishment.". It does not include video lottery terminals (VLTs), horse racing, or
charities that operate casinos for two consecutive days or less.
Issues relating to legitimate or illicit online gambling/gaming activities are beyond the purview of this report, however it is
recognized that unless legislated by the province any casino activity, whether on-line or otherwise, is illegal. Presently,
on-line gambling is reportedly a world-wide, multi-billion dollar industry generating revenues estimated to reach $24 billion
(US) by 2010.1 According to a CBC news report, many of the largest online casinos in the world are operated from the
Kahnawake Reserve in Quebec.2 It has been reported that the Kahnawake Gaming Commission licenses more online
casinos and gambling sites than any other licensing agency in the world and that about 60 per cent of the world's online
gambling traffic runs through servers in Kahnawake. It is therefore important to recognize, within the context of the stated
purpose of this report, that any actions suggested in this report need to be considered insofar as their potential impact on
driving legal gaming activity to illegal gaming activities rendering it more difficult to detect and deter money laundering.
1.4 Consultations and Steering Committee

While the scope of the analysis and research for this report was wide, it also had some limitations due to time and
resource constraints.
Extent of partners and stakeholders consulted. Consultations were held with all key groups within FINTRAC and with
key partners of the Anti Money Laundering / Combating the Financing of Terrorism (AML/CFT) regime (formerly the
NICML) 3to garner an appreciation of their respective perspectives on maximizing the detection and deterrence of money
laundering and the financing of terrorist activities in the casino sector. These partners included the RCMP, the CRA, the
Department of Finance and the DoJ.
Several important stakeholders were not consulted due to time constraints although it is proposed that several of the
actions and recommendations included in this report be brouqht to the attention of the various stakeholders for further
consultation/discussion at a later
Is the Partyoverforonline gambling?'Eric Pfanner, International Herald Tribune, July 4, 2006.

Kahnawake s resident cybercasino giant fined for illegal gaming, CBC News Thursday, November 29, 2007
The NICML was formally established in 2000 as part of the government's ongoing effort to combat money laundering in Canada The NICML is a
horizontal initiative headed by the Department of Finance Canada, and comprised of the Department of Justice Canada, Financial Transactions
and Reports Analysis Centre of Canada (FINTRAC), Canada Border Services Agency (CBSA) - Immigration and Customs, Canada Revenue
Agency (CRA), Royal Canadian Mounted Police (RCMP), Public Safety and Emergency Preparedness Canada (PSEPC) and Canadian Security
Intelligence Service (CSIS). Its shared purpose is to detect and deter money laundering and the financing of terrorist activities and to facilitate
the investigation and prosecution of money laundering and the financing of terrorist activities offences. It has been renamed the Anti Money
Laundering/Anti Terrorist Financing regime.
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Extent of research. Research for this report was restricted due to time and resource constraints. It was clear to those
who prepared this report that judicious use should be made of available resources as a first step in proposing actions to
enhance FINTRAC's operational capacity, and in engaging partners and stakeholders in implementing a National
Casino Sector Initiative. As the research was being conducted it also became evident that many avenues could be
pursued further to deliver a better understanding of particular issues. As a result, this report contains suggestions for
further research and analysis where it is thought that such research might be helpful to strengthen a conclusion or
suggested enhancement, or shed light on unexplored areas.
Steering Committee. A FINTRAC HQ Steering Committee on the casino sector was formed to authenticate, assess
and address concerns with issues relating to the detection and deterrence of money laundering and the financing of
terrorist activities in the casino sector. Members of the Steering Committee were drawn from various areas within
FINTRAC, including the Financial Analysis and Disclosures Directorate, the Regional Operations and Compliance
Directorate, the Strategic Policy and Public Affairs Sector (including the Macro Analysis and Research Unit and the
Communications Unit), the Legal Services Unit and the Information Management / Information Technology Directorate.
The input from Steering Committee Members (and other staff) was further discussed and agreed upon during one-on-
one meetings where specific contributions vis-a-vis data and information requirements were identified. Ongoing
discussions with individual Steering Committee Members took place as needed. Consultations with Regional Operations
and Compliance's (ROC) Casino Working Group also provided important input to the process.

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2. BACKGROUND - RESPONSIBILITIES AND ACCOUNTABILITIES
In order to better understand the context in which the casinos and the key stakeholders must operate, a brief overview
is provided in the sections that follow describing their legislative obligations and responsibilities. Descriptions cover the
key interlocutors involved in the Canada's AML/CFT initiative: FINTRAC, provincial regulators, casino reporting entities,
police forces and other law enforcement.
2.1 Anti-Money Laundering I Combating the Financing of Terrorism

(AML/CFT) (formerly the National Initiative to Combat Money Laundering
(NICML))
The NICML was established in 2000 as part of the government's ongoing effort to combat money laundering in Canada.
Legislation adopted that year, the Proceeds of Crime (Money Laundering) Act{PCMLA), created a mandatory reporting
system for suspicious financial transactions, large cross-border transfers of currency and monetary instruments, and
certain prescribed transactions. It also established FINTRAC to collect and analyze these financial transaction and
cross-border reports and to disclose pertinent information to police forces and intelligence agencies. In
December 2001, the PCMLA was amended to include measures to fight the financing of terrorist activities and renamed
the Proceeds of Crime (Money Laundering) and Terrorist Financing Act {PCML TFA).
The purpose of the NICML is to facilitate a strategic national coordinated effort to detect and deter money laundering and
the financing of terrorist activities, and to facilitate the investigation and prosecution of money laundering and the
financing of terrorist activities offences. The NICML is comprised of the Department of Finance Canada, Department of
Justice Canada, Public Prosecution Service of Canada, Financial Transactions and Reports Analysis Centre of Canada,
Canada Border Services Agency - Immigration and Customs, Canada Revenue Agency, Royal Canadian Mounted
Police, Public Safety and Emergency Preparedness Canada, Canadian Security Intelligence Service and the Office of
the Superintendent of Financial Institutions (OSFI). The initiative was recently renamed the Anti-Money Laundering /
Combating the Financing of Terrorism (AML/CFT) initiative.
2.2 FINTRAC and Legislative Requirements

FINTRAC's mission is to contribute to the public safety of Canadians and help protect the integrity of Canada's financial
system through the detection and deterrence of money laundering and the financing of terrorist activities. It does this
through several principal activities;
- Receive and analyze financial transaction reports submitted by reporting entities, and cross border reports, in
accordance with the legislation and regulations, together with information from international and domestic partners
and from public sources;
Research and analyze data from a variety of information sources that shed light on trends/patterns in financial crime;
Ensure compliance of reporting entities with the legislation and regulations;
Enhance public awareness and understanding of money laundering and the financing of terrorist activities; and
Ensure that the personal information under our control is protected from unauthorized disclosure.
The purpose of the PCML TFA is to:

To implement specific measures to detect and deter money laundering activity and the financing of terrorist activities
to facilitate the investigation or prosecution of money laundering and financing terrorist activities offences, including;

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establishing record keeping and client identification requirements for financial services providers and other
persons that engage in businesses, professions or activities that are susceptible to being used for money
laundering, and the financing of terrorist activities,
requiring the reporting of suspicious financial transactions and of cross-border movements of currency and
monetary instruments, and
Establishing an agency that is responsible for dealing with reported and other information.
To respond to the threat posed by organized crime by providing police officials with the information they need to
investigate and prosecute money laundering or financing of terrorist activities offences, while ensuring that
appropriate safeguards are put in place to protect the privacy of persons with respect to personal information
about themselves; and
To assist in fulfilling Canada's international commitments to participate in the fight against transnational crime,
particularly money laundering and the fight against the financing of terrorist activities.
In December 2006, Bill C-25 amended the PCML TFA to ensure Canada's legislation remains consistent with
international anti-money laundering and anti-terrorist financing standards as set out by the FATF and is responsive to
areas of domestic risk. From an operational perspective, three key elements of C-25 are of particular importance to
FINTRAC:
Expanding the coverage of the Act and Regulations io new entities;
Strengthening the deterrence provisions of the Act, and,
- Expanding the range of information that FINTRAC is required to disclose.
These changes were reflected in FINTRAC's various Guidelines but also in a document entitled Information for Casinos
that outlined clearly what the new obligations were for casinos as of June 23,2008. Of particular relevance to the casino
sector were the following:
1. Reguirements
- Changes to Act and Regulations affecting reporting by casinos
Electronic funds transfer reports (EFTRs) - If instructions are sent electronically for the transfer of $10,000 or
more outside Canada, at the request of a client, an EFT report has to be sent to FINTRAC. If instructions are
received electronically for the transfer of $10,000 from outside Canada at the request of a client, an EFT report
also has to be sent to FINTRAC.
0 Suspicious transaction reports (STRs) - If a STR is about an employee depositing cash into their account,
neither Part E nor Part F applies to that report. If a STR is submitted to FINTRAC, the casino will have to
keep a copy of it. When a STR is submitted to FINTRAC, reasonable measures4 have to be taken to identify
the individual who conducted the transaction.
Large cash transaction reports (LCTRs) - If a large cash transaction report is about an employee depositing
cash into their employer's account, neither Part F nor Part G applies to that report.
Suspicious attempted transactions also have to be reported to FINTRAC. An attempted transaction is one that
a client intended to conduct and took some form of action to do so. New information to be provided in STR
form includes whether the transaction was completed and if not, the reason why it was not completed.
What constitutes reasonable measures will vary in accordance with the context in which they occur, and therefore could differ from one situation
to the next. However, reasonable measures would include retrieving the information already contained in existing files or elsewhere within the
business environment, or obtaining the information directly from the client. In this context, reasonable measures to identify an individual include
asking the individual for an identification document. Reasonable measures exclude any method that would inform the individual that you are
submitting a suspicious transaction report.

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Clarifications affecting record keeping and client identification

General exemptions - When a large cash disbursement record or an extension of credit has to be kept, the
identity of the individual involved does not have to be made if they already have an account with the casino.
0 Client identification - Stricter requirements to ascertain the identity of the individual:
- If there are doubts about the information collected concerning an individual's previous identification, the
individual must be identified again.
- If the identify of an individual who is not physically present has to be ascertained, this can be done by
confirming information about a cleared cheque, or an agent can be used to verify identification.
- Unless an agent or mandatary is used, a combination of two of the following methods to confirm the identity
of an individual who is not present must be used:
referring to an independent identification product or, with the individual's permission, referring to a
credit file;
obtaining an attestation concerning an identification document for the individual from a
commissioner of oaths or a guarantor;
confirming that a cheque drawn on a deposit account with a financial entity (other than one that is
exempt from identification requirements) has cleared; and
confirming that the individual has a deposit account with a financial entity (other than one that is
exempt from identification requirements).
- The two methods in the first bullet involving an identification product and a credit file cannot be
combined, nor can the methods involving a cleared cheque and the confirmation of a deposit account
described in the last two bullets.
- When the identity of an individual is needed in connection to a record created or a transaction the
individual carries out, also now necessary is information about how the individual was identified in the
record that is required to keep. This already applies to signature cards, account operating agreements,
extension of credit records, transaction tickets, large cash transaction records and large cash disbursement
records, but it now applies to any record keep for which the identify the client has to be ascertained.
- If agents or mandataries are used to identify any clients, a written agreement or arrangement with them to
do so will have to be entered into. It is necessary to obtain from the agent or mandatary the customer
information that was obtained according to the agreement or arrangement.
Remittance or transmission of funds - If an amount of $1,000 or more is remitted or transmitted, a record has
to be kept with the following information:
- the name, address, telephone number and principal business or occupation of the client initiating the
transaction;
- if the client is an individual, the date of birth:
- the relevant account number, if any, and the reference number, if any, and date of the transaction;
- the name or account number of the individual or entity to whom the amount is remitted or transmitted;
- The amount and currency of the transaction.
The identity of the individual who requests the transmission or remission of $1,000 or more must also be
ascertained unless that individual already has an account with the casino.
Transaction ticket - A transaction ticket must be kept for any foreign currency exchange transaction, regardless of
the amount. Still required is to identify the individual who conducts that transaction only if it is of $3,000 or more.
Date of birth on records - Currently, when an account for an individual is opened, the name, address and
principal business or occupation of that individual has to be recorded. This also applies to a client who requests
an extension of credit of $3,000 or more. The individual's date of birth must also now be on those records. This

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also applies to a LCTR or any other record about an individual as a third-party. Furthermore, if an LCTR is
kept, it must include the individual's date of birth.
Other changes at the opening of an account - If the identity of an individual or an entity cannot be ascertained
an account cannot be opened.
2. Clarifications affecting the compliance regime

- A person responsible for implementing a compliance regime has to be appointed, and a number of other measures
must be taken, including:
develop, apply and keep up to date written compliance policies and procedures;
assess and document the risk related to money laundering and the financing of terrorist activities in a way that is
appropriate;
develop and maintain a written ongoing compliance training program for employees, agents or other authorized
individuals;
0 establish and document a review of policies and procedures, risk assessment and training program for their
effectiveness - the review will have to be done every two years by either an internal or external auditor or by an
individual of the organization if they do not have an auditor.
If the risk is high for money laundering or financing of terrorist activities, measures have to be taken to mitigate the
risk, and take reasonable measures to keep client identification and information up to date; and conduct ongoing
monitoring of financial transactions to detect suspicious transactions.
3. Administrative Monetary Penalties (AMPs)

AMPs are civil penalties or fines that may be issued in response to non compliance with the PCMLTFA and related
regulations. They are an additional tool to criminal sanctions with the objective of supporting and enhancing efforts
to ensure compliance on the part of reporting entities. AMPs allow for a measured and proportionate response to
particular instances of non-compliance. Violations are classified by the PCML TF Regulations as "Minor", "Serious"
or "Very Serious", and carry maximum penalties of $1,000, $100,000 and $500,000 respectively. The AMPs
program applies to individuals and entities (e.g., corporations).
4. Casino Disbursement Report

- Effective September 28,2009, casinos are required to report a casino disbursement to FINTRAC, and to keep a
copy of the casino disbursement report.
A casino disbursement is any payout, whether in cash or not, of $10,000 or more in the following transactions:
redemption of slot tickets, chips, tokens or plaques;
front cash withdrawals;
safekeeping withdrawals;
advances on any form of credit, including advances by markers or counter cheques;
payments on bets, including slot jackpots;
payments to clients of funds received for credit to that client or any other client;
cashing of cheques or other negotiable instruments; and
reimbursements to clients of travel and entertainment expenses.
A casino disbursement also includes two or more disbursements of less than $10,000 that is paid out to or on behalf
of the same individual or entity within 24 consecutive hours of each other that total $10,000 or more - when an
official or employee knows it is happening.

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If supervising a casino for a registered charity conducting business as a casino for two consecutive days or less on
casino premises, the supervising casino is responsible for any casino disbursement reports as well as the related
record keeping pertaining to the charity's casino activities.
2.3 Provincial Regulators

The Criminal Code establishes the legal framework for gambling in Canada by authorizing only the Canadian provinces
and their appointed agents to regulate and sanction the conduct and management of gaming activities within the
prohibitions and permissions defined by Sections 206 and 207 of the Criminal Code. Each province has established its
own unique regulatory and operating regime (Regulators) to reflect the scope of permitted gambling activities. Hence,
the Regulator is mandated by, and accountable to the government, under the authority of a Provincial Minister. All
Regulators are mandated with reference to the various provincial gaming acts and regulations, as well as Canada's
Criminal Code. The provincial regulatory regimes are as follows:
British Columbia-The Gaming Policy Enforcement Branch (Ministry of Housing and Social Development) regulates all
gaming in British Columbia, including the operations of the British Columbia Lottery Corporation, which conducts and
manages commercial gaming in the province.
Alberta - The Alberta Gaming and Liquor Commission (a Crown commercial enterprise of the Government of Alberta)
is responsible for regulating Alberta's charitable gaming activities and conducting and managing provincial gaming
activities.
Saskatchewan - The Saskatchewan Liquor and Gaming Authority (a provincial Treasury Board Crown Corporation) is
responsible for the distribution, control and regulation of liquor, and licenses and regulates most forms of gaming
including, bingo, raffles, casinos, and horse racing.
Manitoba - The Manitoba Gaming Control Commission (responsible to the Minister of Justice and Attorney General) is
an independent Commission that regulates and controls gaming activity including casino, charitable, and video lottery
terminal gaming.
Ontario - The Alcohol and Gaming Commission of Ontario (Minister of Government Services) is a quasi-judicial
regulatory agency responsible for the regulation of casinos, charity casinos, slot machine facilities at racetracks (racinos)
and lotteries managed and conducted by the Ontario Lottery and Gaming Corporation.
Quebec - The Regie des alcools, des courses et des jeux is responsible for regulating and supervising amusement
machines, video lotteries, casinos, and the lottery schemes operated in those casinos.
Nova Scotia - The Nova Scotia Alcohol and Gaming Division (Department of Labour and Workforce Development) is
the licensing authority for gaming (casinos, bingo, ticket lottery, video lottery, etc.), and regulates the gaming activity.
Prince Edward Island - The Prince Edward Island Lotteries Commission is a licensing authority with the authority to
develop, organize, undertake, conduct and manage lottery schemes or pari-mutuel betting systems. Consumer Services
(Office of the Attorney General) is responsible for charitable gaming which includes bingos, raffles, lotteries, casino
nights, 50/50 draws and sports pools.
The provincial regulators all operate under provincial legislation that defines the scope of their roles, responsibilities and
activities insofar as regulating and enforcing gaming (and casinos) in their province. While it would be fair to say that the
principal preoccupation of the regulators is to ensure integrity in the gaming practices of casinos, their respective
provincial legislations do not assign a role or responsibility for them in supporting compliance with the PCML TFA or in the
enforcement of, other than the gaming provisions, the Criminal Code of Canada. This would be true especially for the
proceeds of crime and financing of terrorist activities provisions of the Criminal Code. However, the fact that FINTRAC
has Memoranda of Understanding (MOU) with five of the eight provincial regulators!S.14&21(1)(a),(d)ATIA

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As part of this report, a brief review was undertaken of the provincial legislation covering two provincial regulators (British
Columbia and Ontario) and a publicly available 2005 B.C. Auditor General report titled Keeping the Decks Clean:
Managing Gaming Integrity Risks in Casinos Audit of Gaming Integrity in Casinos. In essence, neither legislation
covering the two regulators, the B.C. Gaming Policy and Enforcement Branch (GPEB), and the Alcohol and Gaming
Commission of Ontario (AGCO), attribute specific responsibility for combating money laundering and the financing of
terrorist activities in casinos or ensuring some measure of compliance with the PCML TFA. However, although not
explicitly, one can argue that the B.C. legislation does to some degree, while Ontario's legislation does not.
British Columbia - Gaming Policy and Enforcement Branch (GPEB)

In British Columbia, the Gaming Policy and Enforcement Branch is responsible for enforcement of the Gaming Control
/!rt(2002). Section 91 of the Gaming Control Act refers to the removal of persons from premises, and makes specific
reference to persons who are on the premise for 'unlawful purpose' or 'contravening the law1. If a person is involved in
unlawful acts (e.g., money laundering) or contravening the law, they are identified and appropriate action taken.
91(1) A gaming services provider in a gaming facility must ensure that a person does not remain on the premises of the
gaming facility if the gaming services provider has reasonable grounds to believe that the person
(a) is unlawfully on the premises,
(b) is on the premises for an unlawful purpose, or
(c) is contravening the law on the premises.
(2) A gaming services provider or a person acting on its behalf may request a person referred to in subsection (1) to
leave the premises of the gaming facility immediately.
Further authenticating the role of the GPEB is the 2005 B.C. Auditor General report which draws attention to three
potentially significant consequences that exist for government if it fails to adequately ensure gaming integrity in
casinos. These are:
Unsavoury elements (e.g., organized crime and dishonest individuals) may become involved in the industry
posing a threat to patrons and increasing the level of crime.
- A large number of patrons may lose confidence in the industry and stop visiting casinos leading to a significant
reduction in government revenues.
Government may not receive all the revenue to which it is entitled.
The Auditor General's report goes on to state that responsibility for ensuring gaming integrity in casinos rests with two
government organizations; the British Columbia Lottery Corporation (BCLC) which is charged with managing and
conducting casino gaming, and the Gaming Policy and Enforcement Branch (GPEB) which is responsible for regulating
casino gaming.
The Auditor General asserts that the primary responsibility of the GPEB is to ensure the overall integrity of gaming in
British Columbia which includes investigating all alleged contraventions of B.C.'s Gaming Control Act and investigating,
in cooperation with police, all alleged contraventions of relevant sections of Canada's Criminal Code.
It can be surmised from statements made by the Auditor General that as part of this primary responsibility, the GPEB is
also charged with addressing money laundering and the financing of terrorist activities on casino premises. In this
regard, the Auditor General confirms that the casino service provider has a legal obligation to prepare and send a
"Section 86 Gaming Control Act Report" to the GPEB's Investigations Division immediately after any of the following real
or suspected activities or incidents occur at a casino. These are, among others:
money laundering;
loan sharking;
threats against, or intimidation of, gaming employees;
unauthorized gaming activities; and
persons prohibited for known or suspected criminal activity.

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From a FINTRAC perspective, the role the GPEB plays is seen as complementary and supportive of FINTRAC's mandate
with an excellent relationship between the two.
Ontario - Alcohol and Gaming Commission of Ontario (AGCO)

The Alcohol and Gaming Commission of Ontario is a quasi-judicial regulatory agency that is responsible for the
administration of a number of provincial Acts, including the Gaming Control Act 1992. The Gaming Control Act
describes the rules and regulations that gambling establishments have to follow. The Actiocuses on ensuring the
integrity of licensees, registrants and gaming assistants as well as the rules of play.
Although no apparent role or responsibility was found to relate directly to ensuring compliance with the PCML TFA or
detecting and deterring money laundering or the financing of terrorist activities, Ontario Regulation 385/99 Games of
Chance Conducted and Managed by the Ontario Lottery and Gaming Corporation made under the Gaming Control
Act, 1992does contain certain references that may apply to such activity - specifically with regard to the exclusion of
individuals from gaming premises, and large cash transactions.
Exclusion of Individuals from Gaming Premises
35. For the purposes of subsection 3.6 (1) of the Act, the following are prescribed as criteria for refusing an individual access
to gaming premises:
1. The individual has been excluded from premises where gaming occurs by any other jurisdiction where gaming is legal.
2. The individual has cheated at a game of chance held in a casino or at any other place where games of chance are played.
3. The individual has been denied registration or renewal of registration as a gaming assistant or as a supplier.
4. The individual has been registered as a gaming assistant or as a supplier and the registration has been suspended or
revoked.
5. The individual has acted in a way that would adversely affect public confidence that games of chance and casino
operations in general are free from criminal or corrupting elements and are conducted in accordance with the
principles of honesty and integrity. 0. Reg. 385/99, s. 35:0. Reg. 208/00, s. 12.
Large Cash Transactions
27. (1) Unless an operator complies with subsection (2), the operator shall not,
(a) redeem $ 10,000 or more worth of chips or tokens from a player for cash in any transaction:
(b) at a casino, accept $ 10,000 or more in cash as a wager at any gaming activity at which chips are not customarily
used for wagering: or
(c) in any cash transaction, sell $10,000 or more worth of chips or tokens to a player.
(2) On doing any of the activities described in clauses (1) (a), (b) and (c), the operator shall record,
(a) the player's name and permanent address after verifying them by examining a valid driver's licence, passport or
similar piece of identification bearing the player's photograph:
(b) the particulars of the document used to verify the player's name and permanent address and the number of the
document;
(c) the date and amount of the transaction; and
(d) the name, position title and signature of the person completing the transaction and recording the information on
behalf of the operator.
(3) The operator shall forward daily to the operator's accounting department the information recorded and shall keep
it for five years. 0. Reg. 385/99, s. 27.
28. (1) An operator shall log and aggregate all cash transactions of an amount of $2,500 or more occurring within a 24-
hour period between the operator and a specific patron, or a person who the operator knows or has reason to believe
is the patron's agent, at the cage, gaming table, slot department, pit or foreign exchange booth.
(2) An operator shall log and aggregate all cash transactions of an amount under $2,500 occurring within a 24-hour
period between the operator and a patron, or a person who the operator knows or has reason to believe is the
patron's agent, at the cage, gaming table, slot department, pit or foreign exchange booth if any officer or employee of
the operator has reason to believe that the transaction is one of a series of transactions that together may amount to
$ 10,000 or more in a 24-hour period.

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(3) When the transactions togged and aggregated pursuant to subsections (1) and (2) amount to $10,000 or more,
the identification and record-keeping requirements set out in section 27 apply. 0. Reg. 385/99, s. 28.
The Gaming Control Act makes no direct reference to ensuring compliance with the PCML TFA or detecting and deterring
money laundering or the financing of terrorist activities. The Ontario Provincial Police (OPP) has enforcement officers
attached to the Investigation and Enforcement Bureau of the Alcohol and Gaming Commission of Ontario. The
Investigation and Enforcement Bureau has a permanent OPP presence in casinos located in Niagara Falls, Windsor, and
Orillia. Twenty-four hour policing is provided at casinos in these cities, and at all charity casinos.
It is interesting to note that in the AGCO's mandate statement, "Our mandate is to regulate the sale, service, and
consumption of beverage alcohol to promote moderation and responsible use, and to ensure that casino gaming,
charitable gaming and lotteries are conducted in the public interest, by people with integrity, and in a manner that is
socially and financially responsible", there is an intimation to some extent of the AGCO's responsibility to address money
laundering or the financing of terrorist activities when it states - "in the public interest... socially and Financially
responsible".
24 FINTRAC and Provincial Regulators - Memoranda of Understanding

FINTRAC can enter into a Memoranda of Understanding (MOU) with a Regulator for the purpose of ensuring compliance
with Part 1 of the PCML TFA. Specifically, subsection 65(2) of the PCML TFA allows FINTRAC to disclose to, or receive
from, any agency or body that regulates or supervises persons or entities to which Part 1 applies, information relating to
the compliance of those persons or entities with that Part of the Act
The information to be shared must be consistent with the terms of the MOU and provided for the purpose of ensuring
compliance with Part 1 of the PCML TFA. In this regard, the MOU outlines the type of information that FINTRAC will
share with the Regulator, and the type of information the Regulator will share with FINTRAC. FINTRAC currently has
MOUs with five of the eight Provincial Regulators:
British Columbia Gaming Policy Enforcement Branch
Alberta Gaming and Liquor Commission
- Saskatchewan Liquor and Gaming Authority
Alcohol and Gaming Commission of Ontario
Nova Scotia Alcohol and Gaming Division
An assessment of the volume and quality of the information received from the Casino Regulators by FINTRAC under
the terms of the MOUs was not examined thoroughly as part of this report. However, it is understood that any
information provided by the regulators may enhance but not substitute the information required as part of a FINTRAC
compliance examination.
2.5 Casinos as Reporting Entities (REs)

Under Part 1 of the PCMLTFA, persons and entities (referred to as Reporting Entities) are required to submit reports to
FINTRAC. Within the context of the casinos, this includes those authorized to do business in Canada with a slot
machine or roulette wheel or card games, but excludes certain temporary charity casinos. Reporting entities must
report attempted suspicious transactions, STRs, LCTRs, TPRs, and EFTs. The casino REs must also report Casino
Disbursement reports (CDRs) and implement a compliance regime and meet reporting, record keeping and client
identification obligations. In addition to the PCML TFA requirements for casino REs, they must also abide by their
related provincial legislation.

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There were as of July 2009, 38 casino reporting entities in Canada (Table 1). The reporting entities are subject to the
authority of the Provincial Regulators.
Table 1
Provincial/Territorial Distribution of Casinos by Type
& Corresponding Reporting Entities Subject to the PCML TFA
Province/Territory Commercial Slots/ Charity First Seasonal Total Reporting

Casinos Racinos Nations Locations Entities
British Columbia 16 12 0 0 1 30 2
Alberta 0 4 19 5 2 29 23
Saskatchewan 2 0 0 5 0 7 2
Yukon 0 0 1
Manitoba 2 0 0 2 0 4 3
Ontario 4 17 5 1 2 29 4
Quebec 3 0 0 0 0 3 1
Nova Scotia 2 0 0 0 0 2 1
Prince Edward Island 1 0 0 0 0 1 1
Total 31 33 24 13 6 106 38
2.6 Police Forces

Money laundering and the financing of terrorist activities are Criminal Code offences. They are the enforcement
responsibility of police. Casinos may be unwittingly used by criminals to launder money or finance terrorist activities. In
such cases police will work with casinos to investigate and prosecute the individuals involved. Should reporting entities,
such as casinos, wilfully fall short of their obligations in respect of the Criminal Code, the PCML TFA or any other
legislation, the casinos themselves may be the subject of criminal investigation by police and prosecution.

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3. FOCUS ON CASINOS - THE ENVIRONMENT
3.1 Canadian Casinos - Structure and Operations

The Canadian casino/gaming structure is different from many international counterparts. Casinos in Canada operate
exclusively under the control of the provincial and territorial governments. Although casinos are considered to be non-
financial institutions in some instances they do offer services that are similar to financial institutions such as foreign
exchange, cheque cashing, and credit or front money accounts.
The types of casinos (Table 1) that fall under paragraphs 207(1 ){a) to {g) of the Criminal Code are as follows:
Commercial Casinos - Casinos are owned by Provincial Crown Corporations but in some cases the daily
operation is outsourced to private companies.
Charity Casinos - Casinos run by, and for the benefit of charitable organizations.
Slots-at-Racetracks (Racinos) - Slot machines run by provincial corporations located at racetracks.
First Nations Casinos - Operated by First Nations communities.
Seasonal Casinos - Casinos permitted to operate under subsection 207(1 )(c) of the Criminal Code by a fair or
exhibition for a few weeks per year.
3.2 Recent Media Attention

News media focus on casinos increased since May of 2008 as a result of an investigation by the CBC which revealed
how criminals may launder money in B.C. casinos.
"An undercover investigation by the CBC revealed how easy it may be for criminals to launder money in B.C.'s casinos.
To test the process, CBC reporters openly fed thousands of dollars in $20 and $100 bills into slot machines at two large
Metro Vancouver casinos.
Slot machines issue payout stubs for cash. (CBC)
After playing the slot machines only a short while, they took their credits to the cashier and were given cheques in return.
In four instances, CBC employees were able to turn a total of about $24,000 of cash into cheques...." (Criminals target
B.C. casinos and other cash businesses, police say, CBCNews.ca, May 23, 2008).
"B.C.'s solicitor general has called an emergency meeting with the head of the B.C. Lottery Corp. after a CBC News
investigation revealed suspected money laundering at the province's casinos is under-reported..." {CBC News probe
leads to emergency meeting with B.C. Lottery Corp. CBC News Wednesday, May 21, 2008).

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This initial news investigation gave rise to numerous subsequent media reports and commentaries on criminal activity
and money laundering in B.C. casinos, and the apparent lack of Provincial Government measures to prevent such
activity and "under-reporting" of suspected money-laundering.
In Ontario, "An RCMP probe into a southern Ontario drug trafficking ring has exposed a loophole in the province's casino
system that police fear criminals are exploiting in a bid to launder the proceeds of crime", (Casino loophole lets criminals
launder cash, RCMP fear, CBC News Tuesday, May 20,2008). As well, "As part of an investigation into suspected money
laundering at casinos in Ontario, CBC News discovered it isn't difficult to leave a casino with an official cheque, even after
behaving in what security officials consider to be a suspicious manner... "(CBC tests system by visiting casinos, cashing
out large amounts, CBC News Tuesday, May 20, 2008).4
In Manitoba, "Police and lotteries officials in Manitoba say news that criminals are using casinos to launder money
comes as no shock to them but they're confident it's not happening on grand scale in the province..." {Money
laundering scheme no surprise to Manitoba casinos, CBC News Wednesday, May 21, 2008/
In Atlantic Canada, "A spokesman for the Atlantic Lottery Corporation says there's no reason to believe the province's
video lottery terminals are being used for illegal purposes...", (No suspicion of money laundering at VL Ts: lottery
corporation, CBC News Monday, May 26,2008. The Canadian Gaming Association, May 23, 2008 said that "Canada's
gaming operators take the issue of money laundering very seriously, and have strict standards and procedures in place
to deter and detect criminals attempting to exploit casino operations.... They also say that security and surveillance staffs
are thoroughly trained to detect any suspicious activity, including signs of potential money laundering...", {Canada's
Gaming Establishments - No Place to Launder Money, Paul Burns, Vice President, Public Affairs, Canadian Gaming
Association, May 23,2008/
The Times Colonist (Sunday, May 25, 2008) wrote that both the money laundering issue and the ongoing problem-
gambling issue could be addressed by implementing a mandatory access card system in casinos (or, in more positive
terms, customer loyalty cards with preferential odds). Such a system would link deposits and winnings to individuals,
allowing monitoring to identify persons who might be potential problem gamblers or money launderers.
3.3 The RCMP Report (Criminal Trend Assessment - Project STREAK -

Money Laundering in Casinos: A Canadian Perspective)
The stated goal of a RCMP report published confidentially in June 2008 was to determine the vulnerability of Canadian
casinos to money laundering and illicit organized crime activity. The RCMP Report in part concludes that:
Canadian casinos are extremely vulnerable to money laundering since they deal in cash and handle tens of millions
of dollars every day;
Casinos are being used as financial intermediaries and laundering facilities;
S.16(1)(a)&16(1)(c)ATIA
Organized crime is present in casinos at several levels; and
S.16(1)(a)&16(1)(c)ATIA
The RCMP report raised some important issues that need to be taken into consideration, The report raised the profile of
vulnerabilities in the casino sector.!S.14, 16(1)(c), & 21(1)(a),(d) ATIA
4 It should be noted that suspicious transactions must be reported to FINTRAC, not suspicious activity.
atip doc# 271609 Page 20 of 60

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S.14, 16(1)(c)&21(1)(a),(d)ATIA
Table 2
STRs Submitted by Canadian Casinos - 2002 to 2008
Calendar Year Total # Average # STRs

of STRs per Month
2002 438 36
2003 372 31
2004 367 30
2005 407 34
2006 446 37
2007 893 74
2008 4,833 402
Total (2002-2008) 7,756 92
3.4 Asia Pacific Group (APG) and Financial Action Task Force (FA TF)
Working Group on Typologies - Report on ML/TF Vulnerabilities of
Casinos and Gaming Sector (February 2009)
The APG and FATF have undertaken a joint study of vulnerabilities in the gaming and casino sector. The study resulted
from a FATF and APG mutual evaluation and earlier typologies work, which noted a range of ML/FT risk factors related to
gaming and casinos.
Typologies produced by the FATF and APG over the last 10 years have identified a money laundering risk from casinos
and gaming. The report states that the casino and gaming sector is characterized by diverse types of gambling activity,
size and rate of development, as well as public and private sector ownership models.
Within the gaming and casino sector, the FATF recognised that casinos represent the greatest risk for money laundering
activities. This was reflected in the revision of the FATF 40 Recommendations 2003, with obligations on casinos being
significantly enhanced in relation to customer due diligence (CDD), record keeping, reporting of suspicion, and
comprehensive regulation and supervision. The report states that the size of the global casino business was estimated at
over USD $70 billion in revenue in 2006, with Canada and the United States accounting for almost 50% of that amount.
Casinos are a cash intensive business and the majority of transactions are cash based. Casinos are considered to be
non-financial institutions. However, casinos also undertake various financial activities that are similar to financial
institutions which put them at risk of money laundering. Such activities include accepting funds on account, money
exchange, money transfers, foreign currency exchange, cheque cashing, etc. In many instances these financial services
are available 24 hours a day. The variety, frequency and volume of transactions make the casino sector particularly
vulnerable to money laundering.
ATIP Doc# 271609 Pase21 of 60

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The APG report also recognizes that:
casinos are attractive venues for criminals;

casinos are targeted by criminals for criminal influence and exploitation;
organized crime groups attempt to control and/or own casinos or aspects of casino operations;
criminals attempt to infiltrate or influence casinos to facilitate theft, fraud, money laundering and other crimes; and
casinos are seen as a place where criminals and organised crime figures like to socialize, and spend and launder
their proceeds of crime.
It is this environment that the APG report identifies the need to conduct periodic assessments of ML/TF risks in the
casino and gaming sector.
Broad conclusions/observations contained in the APG report include:

Globally (albeit at low levels), the casino sector has shown relatively higher levels of compliance with FATF
standards than other Designated Non-Financial Businesses and Professions, due largely in part to governments
imposing stringent supervision and record keeping on casino operations in order to track and secure revenues.
Casinos are not doing enough to establish source of funds. They are also failing to recognize suspicious activity5 by
their customers.
Casinos must be more aware of customer's financial transactions and gambling behaviours, particularly if it does not
correspond to what would be considered a normal gambler, or if playing to win is apparently absent or secondary.
It should be recognized that indicators are not of themselves evidence of money laundering. It is not the casino's
responsibility to determine that money laundering activity is taking place. Rather, it is the casino's role to identify
and report the suspicious activity. It is then up to the Financial Intelligence Unit (FIU) and the police authorities to
get involved and determine if there is a link to ML/TF.
3.5 Financial Action Task Force Third Mutual Evaluation on Anti-Money

Laundering and Combating the Financing of Terrorism - Canada
(February 2008)
The 2008 FATF report provides a summary of the AML/CFT measures in place in Canada as of June 2007. The report
describes and analyses those measures and provides recommendations on how certain aspects of the system could be
strengthened. Also included is a commentary on Canada's levels of compliance with the FATF 40 + 9 Recommendations.
It should be noted that a number of legislative, regulatory and administrative measures have already been taken
by Canada to address the deficiencies identified by the FATF since the report was initially written and produced.
Nonetheless, as background information, the FATF states in its report that the money laundering methods used in Canada
essentially consist of smuggling, money service businesses and currency exchanges, casinos, purchase of real estate,
wire transfers, establishment of offshore corporations, credit cards, stored value cards and new payment methods, use of
nominees, use of foreign bank accounts, use of professional services (lawyers, accountants, etc.), and reinvestment and
distribution in illicit drugs. At the placement stage, criminals are using money service businesses or casinos. Electronic
5 As noted previously, PCMLTFA requirements are concerned with suspicious transactions and not suspicious
activities. In other jurisdictions, such as many covered by the APG report, legislative requirements may cover the
reporting of suspicious activities and not exclusively suspicious transactions.

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funds transfers are being used for layering and at the integration stage, criminal proceeds are used to purchase high-value
assets in attempts to conceal the origin of the funds.
With reference to the casino sector, the FATF has made specific observations and recommendations. For example,
provisions in relation to record-keeping with regard to casinos, among other designated non-financial businesses and
professions (DNFBPs) are not fully in line with the FATF standards. The FATF contends that because of limited staff
resources, FINTRAC is not in a position to ensure an efficient monitoring of the effective application of AML/CFT
legislation in the non-financial sectors (including casinos) captured by the PCML TFA. This is especially true where the
primary regulators or self regulatory organizations (SROs) are either not involved, or insufficiently involved, in AML/CFT
compliance monitoring.
The FATF states that Canada should ensure that supervisory actions (especially on-site examinations) vis-a-vis casinos
(and more generally with all DNFBPs) are reinforced. With regard to all DNFBPs, the FATF notes that the sanction
regime available to FINTRAC is currently inadequate but should be strengthened when administrative and monetary
penalties are introduced in June 2008.
Among the FATF's Recommendations that specifically reference casinos, the FATF rated Canada as Non-Compliant on
2 of these in June 2007. They are as follows:
Application of Recommendation 5 to casinos

The requirements applicable to casinos are insufficient in relation to:
1. when customer due diligence (CDD) is required;
2. required CDD measures;
3. identification of persons acting on behalf of the customer;
4. third party determination and identification of beneficial owners;
5. purpose and intended nature of the business relationship;
6. ongoing due diligence;
7. ML/FT risks; and
8. failure to satisfactorily complete CDD.
Application of Recommendation 24 to casinos - Supervision of casinos

The sanction regime available to FINTRAC is currently inadequate. Provincial regulators may have administrative
sanctions at their disposal but there is no evidence that these are dissuasive, effective and proportionate, since no
data or statistics regarding sanctions taken by these regulators on the grounds of AML/CFT non-compliance issues
have been made available to the assessment team.
The FATF states that overall, FINTRAC seems to be well-equipped, staffed, resourced and trained. However, there are
some concerns about the availability of resources within FINTRAC to undertake a sufficient number of comprehensive
examinations. They also state that the number of staff dedicated to the analysis of ML/TF cases is too low. It should be
noted that FINTRAC has responded to these concerns by accelerating as well as increasing FINTRAC's examination
coverage of casinos.
It is duly noted that leading up to, and implemented since the release of the FATF's 2008 report, as well as
coming into force in late 2009, legislative and regulatory changes have, and will be implemented that address
several of the compliance concerns identified by the FATF. In this regard, the FATF has since identified
Canada's compliance with the two above-noted FATF Recommendations as compliant.
AT I P Doc# 271609 Pa8e ^3 of 60

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4. CANADIAN CASINOS - ANALYSIS AND DISCUSSION
4.1 Overview of Casino Sector Compliance Examinations Conducted

September to November 2008 by FINTRAC
FINTRAC implemented an extensive compliance examination plan from September to November 2008 consisting of
targeted examinations for casino REs identified as high-risk for non-compliance. The examination plan included:
10 casino REs (across Canada) representing 26% of all casinos in Canada;
- 22 actual locations;
Examination of in excess of 11,200 records and reports; and
Interviews of hundreds of casino staff including employees involved with compliance, supervisors, dealers, cash
cage, security and surveillance.
The examinations were considered to be detailed in that they included an assessment of the casinos' compliance regime,
ascertaining of ID, third party determination, record keeping and reporting (STRs, LCTRs, EFTRs, TPRs) practices. The
examination team included all working group members from all three regions and HQ to draw on the widest array of
expertise available. The average on-site portion of examinations took from two to five days.
Summary Results
Compliance Regime.
Review of Policies and Procedures, Training Program and Risk Assessment
0 50% of the casinos examined had not completed any review for effectiveness.
Documented Training Program
60% of casinos examined either had no formal documented training program or had not delivered the training
program to all relevant employees.
Risk Assessment for ML/TF
While this was a new requirement as of June 23,2008,60% of casinos examined either had no documented
risk assessment or had not implemented sufficient mitigation controls for high-risk situations.
Ascertaining ID.
Less than 2.5% of the records reviewed identified absence of identity being ascertained.
18% of records had not ascertained occupation or had provided too vague a description (i.e., "self employed").
Third Party Determination.

Less than 1 % of the records reviewed identified a failure to make a third party determination.
Record Keeping.
Less than 1% of the records reviewed identified any issues with record keeping obligations.
Reporting.
- STRs
0 Unreported STRs were not identified as being a widespread problem.
0 Only one casino, due to an erroneous interpretation of "reasonable grounds to suspect" and lack of review, was
cited for failure to report STRs.
Further guidance on STR indicators for casinos was identified by the examination team as being needed to
enhance their monitoring and detection processes going forward.

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- LCTRs
50% of the casinos examined had deficiencies relating to reporting LCTRs in accordance with the 24hr rule.
In total, 29% of all LCTRs reviewed had deficiencies in this regard.
All casinos examined were requested to provide a written action plan to address their deficiencies. The casinos' action
plans will be assessed to determine if they are adequate and follow-up actions may be conducted if needed.
Additional Observations
Although the sampling of the number of casinos and of records varied from province to province, there are some
significant concerns relating to various deficiencies with certain casinos in certain provinces. For example;
in 9 provinces, 'occupation'was not recorded on reports 4.9% to 100% of the time,
in one province, 'records were not kept'20.9% of the time,
the '24-hourrule'was not adhered to in five provinces 13.7% to 94.6% of the time, and
in 3 provinces, late reporting' occurred 15.4% to 81.5% of the time.
Given these observations, and the significance of some of the deficiencies, it is suggested that FINTRAC
explore the feasibility of conducting more frequent examinations of at-risk casinos.
4.2 Volumetrics - Reporting Trends of LCTRs and STRs by Province

An analysis of the volume of reports submitted by casinos was conducted with the purpose of determining whether any
trends, issues or concerns could be identified. Table 3 summarizes the reporting volumes and trends of LCTRs and STRs
by individual province. The discussion to follow will address the general trends in LCTR and STR reporting by provinces
with special emphasis]S. 16(1)(c)ATIA
Table 3
Rfinortino Volumes and Trends of LCTRs and STRs bv Province

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Figure 2 shows for the seven year filing period (2002 - 2008), the percentage of STRs filed by casinos where Part DM
not include the name of the individual conducting the transaction - and in most cases did not report information in other
fields of Part D. Table 4 provides a detailed year-by-year provincial breakdown of Figure 2.
Figure 2
Percentage of Casino STRs Filed by Province from 2002-2008 Where
Individual Conducting the Transaction is Not Recorded in Part D
Alta Sask Man Ont Que PEI
For the seven year filing period (2002 - 2008), in order of highest to lowest percentage of STRs that did not include the
name of the individual conducting the transaction in Part D:
57% by Manitoba
- 28% by Nova Scotia
25% by Prince Edward Island
- 20% by Quebec
15% by Saskatchewan
13.5% by British Columbia
12% by Alberta
- 2% by Ontario
In 2008 alone, in order of highest to lowest percentage of STRs that did not include the name of the individual conducting
the transaction in Part D.
- 53% by Manitoba
45% by Alberta
- 28% by Nova Scotia
26% by Quebec
25% by Prince Edward Island
14% by Saskatchewan
2% by Ontario and British Columbia

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Anecdotal information from the RCMP who have met with "... Officials from the different casinos confirmed that
S.16(1)(a)&16(1)(c)ATIA that almost all waaersare madeincas
S.16(1)(a)&16(1)(c)ATIA it may be useful to obtain data from the casino REsp "i1("J'-')>K'-''- ^Q.^1
hromTne "perspective 01 go rripli ance with Sub-Sections 9.6(1), (2) and (3) of the PCMLTFA arldlhe "regulations'"
section 71 (2 S.16(1)(a)&16(1)(c)ATIA
4.4 Matching of STRs - Casino and Non-Casino Sectors

S. 14&16(1)(c)ATIA
S. 14&16(1)(C)ATIA
S.21(1)(a),(d)ATIA

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4.7 Bringing Information Together for Compliance, ML and TFPurposes

FINTRAC's capacity to detect and deter ML and TF is enhanced when information is brought together from various
sources, shared, analysed and actions are identified to correct vulnerabilities. For example:
ROC Directorate has had a Casino Working Group in place for many years where HQ and regional representatives
have collected and shared information with the view of better understanding compliance issues in the casino sector.
Risks have been identified, relationships with regulators have been assessed and examination plans executed on a
systemic basis.
Within FADD, analysts who have experience in working in certain sectors or with specific criminal organizations
have come together on an ad hoc basis to work on major cases. A more systematic approach has been undertaken
within FADD to capitalize on analysts' experience on future projects. Analysts with experience with cases involving
suspected ML/TF in casinos are now being brought together.
The RCMP has met with the FINTRAC authors of this report and discussed its report on Project Streak. Useful
information came out of the meeting.
The Departments of Finance and Justice, and the Canada Revenue Agency also met separately with the authors of
this report. Once again, valuable information was gained not only on the different perspectives and concerns each
may have about ML and TF in general, but also with their difTererturj^
addressing vulnerabilities in the casino sector. For example. S. 16(1 )(c)& 21(1 )(b)ATIA

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However, when information is not systematically or regularly analyzed, shared or common actions established, opportunities
are lost. For example;
S. 16(1)(c)&21(1)(a),(d)ATIA
The sharing of information from FADD to ROC, and vice-versa, respecting both the perception of, and the actual
legalimpediiTiente where they exist, must be an essential component of operations that benefits FINTRAC. I
S. 16(1 )(c)& 21(1 )(a),(d) ATIA
S. 16(1 )(c)& 21(1 )(a),(d)ATIA
A number of stakeholders were not consulted, due to time and resource constraints, in the course of preparing this
report. As part of what is later proposed as engaging partners and stakeholders in the implementation of a National
Casino Strategy, certain information in this report should be shared and discussed with the appropriate partners and
stakeholders in an appropriate forum or information sharing mechanism.
A major step in this direction has already been taken with the production of a report on Money Laundering Typologies
and Trends in Canadian Casinos. This is an important build]ng_bjockjn enhancing awareness of vulnerabilities in the
sector. However more value could be added S. 16(1 )(c)& 21(1 )(a),(d) ATIA
FINTRAC itself and with police, there is a continuing need tor analysis of
typologies in this sectonhcluding a better sharing of information with casino REs, regulators, police forces,
other law enforcement and other partners.
Building on the success of the report on Money Laundering and Terrorist Financing Typologies and Trends in
Canadian Banking and the success of the similar report on Money Laundering Typologies and Trends in
Canadian Casinos, it is suggested that FINTRAC consider initiating a forum for systematically bringing all or
groups of partners and stakeholders together, as appropriate, to review the status of ML/TF in the casino sector,
identify opportunities for improvement and agree on a plan of action in order to ensure an enhanced level of
understanding of sectoral issues and a more coordinated approach to address vulnerabilities in the casino
sector
S. 21(1 )(a),(d) ATIA

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An important element of deterrence is publicity about vulnerabilities and actions taken to address ML and TF in any
sector. A series of media reports in May 2008 may have affected public confidence in the ability of casinos and their
regulators to detect and deter ML/TF. Opportunities exist to enhance the public's awareness of both vulnerabilities and
actions taken to correct them in order to deter and detract any individuals from using the casino sector for ML/TF
4.8 Stakeholder Consultations - Perspectives and Input

Consultations were held with key partners of the AML/CFT initiative to gain an appreciation of their respective
perspectives on the issue of money laundering and the financing of terrorist activities in the casino sector. The partners
included the RCMP, the CRA, the Department of Finance, and the DoJ.
The consultations proved to be beneficial to FINTRAC's efforts in addressing money laundering and the financing of
terrorist activities in the casino sector insofar as there was a general consensus that there is a need for a more
coordinated approach to addressing ML and TF issues relating to the casino sector, reducing vulnerability of the casino
sector to ML and TF with more vigilant compliance, and an appreciation of how this coordinated approach would be of
mutual benefit.
There were also a number of questions and proposals (casino policy and legislative/regulatory) put forth by partners and
discussed that they believe would aid in the effort to maximize the detection and deterrence of money laundering and the
financing of terrorist activities in the casino sector. The following proposals were identified collectively as being
beneficial:
S. 16(1)(c)&21(1)(a),(d)ATIA

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4.9 Disclosures Involving Transaction Reports from Casinos

An analysis of the numberofdisc^
* il^1l))((fe)T7\v-1rl i\ I The results were as
TOllOWS^^^
- 2006/07 - 22 cases out of total of 193 (11 % of all cases);
- 2007/08 - 25 cases out of total of 210 (12% of all cases); and
- 2008/09 -111 cases out of a total of 556 (approx. 20% of all cases).
S. 16(1 )(c) ATIA

Protected A
5. ISSUES AND PROPOSED ENHANCEMENTS
While this report has identified several issues and makes many suggestions for maximizing the detection and deterrence
of ML and TF in the casino sector, it is important to note that the ML/TF regime in Canada is one of the strongest
regimes overall in the world. This might be considered a controversial statement to make when one considers the
FATF's evaluation of Canada's regime in 2007, the RCMP's report or the FATF and APG Typologies reports. However,
Canada's overall AML/CFT regime was strong to begin with. With a changing environment in Canada in the last two
years, a number of new reinforcing measures (since those reports were published) have been introduced:
Legislative and regulatory improvements that came with Bill C-25as noted in Section 2.2 of this report including:
8 The addition of EFTs and attempted suspicious transactions to the TPR, STR and LCTR reports received from
casinos;
0 The implementation of world-unique casino disbursement reports commencing in September 2009;
The introduction of an Administrative Monetary Penalty System (AMPS);
0 The introduction of risk based application in the compliance regime and stricter requirements in the
implementation of the compliance regime; and
The implementation of stricter record-keeping, client identification and third party determination rules.
- The on-going compliance monitoring of the sector by ROC; and
The enhanced capability offered by FINTRAC's analytical staff and analytical tools S. 16(1 )(c) ATIA
Furthermore, time did not stand still from the time the research was initiated in January 2009 and concluded in June
2009. Informed by some of this research and analysis, by initiatives undertaken by various Sectors and Directorates
within FINTRAC (mostly the Regional Operations and Compliance Directorate), dynamic changes in the relationship with
casino REs and casino regulators, the implementation of the new casino disbursement report, and many other factors,
FINTRAC continued to enhance its detection and deterrence capability up until the production of this report in December
2009.
In fact, in 2009-10 there has been considerable interaction with the casino sector as a whole. FINTRAC has met with all
regulators with whom it has MOUs, sharing not only the results of its examinations but looking for better ways to work
c o l l a b o r a t i v e l y , g j f fi H j H j _ _ ] T h e D i r e c t o r p r e s e n t e d a t t h e
Canadian GamingRegulatorsA^ concerns with respect
to compliance in the casino sector of which both the regulators and the gaming industry itself took notice. FINTRAC's
messaging in 2009-10 has also been very clear. FINTRAC now has the capacity to utilize administrative monetary
penalties (AMPs) and will not hesitate to do so where appropriate. ROC continued on a cyclical examination schedule
completing fulsome examinations of entities not reviewed previously (including enhanced reviews of reports off site) and
followed up on findings for those entities already reviewed. ROC is still finding some gaps in record keeping and training
but there is evidence that these gaps are closing. There was also a significant effort made to consult with the entire
gaming community in advance of the implementation of casino disbursement reporting (CDR) in the fall of 2009. As
CDRs are filed, FINTRAC's approach has been to adopt a zero tolerance to errors or omissions, and in such cases the
CDRs have been returned for correction to ensure that there is no opportunity to develop ineffective reporting practices.
Finally, after additional consultation, a trends and typologies document outlining vulnerabilities within the casino sector
was released in November 2009. This report should further assist casinos in broadening their training materials and
developing more encompassing mitigation strategies for their risk-based approach.
It is against this background of an existing strong regime that opportunities for enhancement have been identified that this
report proposes a series of suggestions to maximize the detection and deterrence of ML/TF in the casino sector.

Protected A
Suggested enhancements are identified under five headings; 1) Reporting Trends and Volumes, 2) Quality of Reporting, 3)
Analysis of VIRs.BBH I. Case Disclosures and Sharing of Information^) Stakeholder Perspectives and Input., and 5) On-
Line Gambling anamegaTCasinos.
5.1 Reporting Trends and Volumes

Consider enhanced monitoring and analysis of reporting trends and volumes in the casino sector and sharing of
information. FINTRAC has just produced in November 2009 a report entitled Money Laundering Typologies and
Trends in Canadian Casinos on the heels of a recently successful similar report in the Banking Sector. This effort is
significant in bringing knowledge about the vulnerabilities of the casino sector to a broader audience within and outside
the Centre and by sharing with partners and stakeholders. However, in order to continue to maintain a high level of
monitoring and encourage further sharing of information:

Protected A
It is suggested that consideration be given by:

4. FINTRAC, specifically ROC, in enquiring with each casino (REs) that demonstrated a spike in
STR reporting after May_2008, and conducting research to determine the causes of the spike in
reportinq and,
5.2 Quality of Reporting

This report has provided a glimpse into areas of STR quality of importance to FINTRAC analysts. Specifically, there
exist significant deficiencies with respect to the quality of STRs as they relate to Parts D and Gfor certain casinos.

5. FINTRAC in taking further action to enhance the analytical value of informationj)_royjdrJ_in Part
Gof the STR by those casinos in the provinces identified in this report!S. 14&16(1)(c)ATIA
6. FINTRAC in further examining the reasons why there is such a lack of information in respect of
the name of the individual conductinq the transaction (as well as other information with high
analytical value) in Part D of STRs especially in the case
7. FINTRAC in exploring with casino REs the feasibility of providing information to FINTRAC
about the risk of "High rollers and frequent (high value) players". If a high risk exists, casino
REs should adjust their compliance measures to meet the requirements of the Act (Section 9.6
(1), (2) and (3)) and in accordance with the regulations.
8. FINTRAC, given observations made about the significant deficiencies in certain casino REs in
the quality and value-added of their reporting to FINTRAC, to assessing the feasibility of
conducting more frequent examinations of at-risk casinos.
9. FINTRAC, to researching alternative compliance examination methods (for compliance
purposes) with other government departments> andUhe DoJ todetermine: of any new
opportunities in verification methods.!S. 16(1 )(c)& 21(1 )(a),(d) ATIA

Protected A
S. 16(1 )(c)& 21(1 )(a),(d) ATIA
5.3 Analysis of VIRs, 16(1)(c)

ATIA L Case Disclosures and Sharing of Information
An analysis was conducted of VIRs from police forces that included gaming or casino references. It is suggested that
the results of this analysis be shared within FINTRAC and that periodic analysis be conducted by FADD analysts who
have experience with casino cases (e.g., a FADD Casino Working Group) and the results shared within FINTRAC.
10. FADD, with MAR's participation where appropriate, to meet periodically with key police force partners;
outline the analytical results in the casino sector; and receive feedback from police on the quality of
tactical[and strategic.intelligence provided with the view that this information be reported back to the
S.16 1 c ATI
11 . FADD, in sharing with ROC,|MBj||JJWgy[j] JandEXCOthe

results of the s p e c i fi c VIR anaTysiômpletecnlsf^ of VIRs
with references to casino or gaming.
It was noted earlier in this report {Section 4.6} that there is opportunity to enhance the feedback from FADD to ROC
with respect to the quantity, quality and analytical value of reporting by considering the establishment of a systematic
dialogue between ROC and FADD about issues, concerns and typologies in the casino sector. The same opportunity
exists to explore a dialogue with all key partners and stakeholders, as appropriate.
It is suggested that consideration be given:
12. By FINTRAC, building on the success of the report on Money Laundering Typologies and Trends in
Canadian Casinos not only continue producing this report periodically but also initiating a forum for
systematically bringing all or groups of partners and stakeholders together, as appropriate, to review the
status of ML/TF in the casino sector, identify opportunities for improvement and agree on a plan of
action in order to ensure an enhanced level of understanding of sectoral issues and a more coordinated
approach to address vulnerabilities in the casino sector.
13. To explore a requirement for casino REs to submit reports to FINTRAC every two years on risks and
trends for ML/TF in their casinos.
14. By FINTRAC in developing and coordinating messages to the public that partners and stakeholders in
the AML/CTF regime are active in maximizing the detection and deterrence of ML/TF throughout the
sector.
5.4 Stakeholder Perspectives and Input

Consultations with key partners of the AML/ATF regime provided an appreciation of their respective Jjerspectiyeson
money laundering and the financing of terrorist activities in the casino sector. S. 16(1)(c)&21(1)(a),(d)ATIA

Protected A
18. Casino REs maintain heightened vigilance on individuals known to be involved in illegal activities who
freauent their Dremises:
S. 16(1)(c)&21(1)(a),(d)ATIA
23. Encouraging casinos to opt for batch reporting as a more effective method in providing better quality
data to FINTRAC.
5.5 On-Line Gamb/ina and IIfecial Casinos

Protected A
6. CASINO SECTOR - TWO KEY INITIATIVES

In the previous section, twenty-four suggested enhancements were identified to maximize the detection and deterrence of
ML and TF in the casino sector. Of these twenty-four suggestions, ten can be assessed for feasibility and be considered for
implementation by FINTRAC largely without further consultation or engagement of partners and stakeholders as they
involve mostly internal-to-FINTRAC decisions or actions. However the remaining fourteen recommendations require, or
would benefit significantly from, consultation and further engagement of partners and stakeholders. Hence to be both
comprehensive and successful it is proposed that the approach to maximizing detection and deterrence of ML/TF in the
casino sector include two main initiatives. The first, Enhancements to FINTRAC's internal operational capacity would be
directed internally at addressing enhancements within FINTRAC's direct control and a second initiative, Proposal for a
National Casino Sector Initiative, would engage external partners and stakeholders.
6.1 Enhancements to FINTRAC's Internal Operational Capacity

Internally, there is a necessity for FINTRAC to embark on a more vigorous, proactive and collaborative approach to
enhance FINTRAC's capacity at detecting and deterring money laundering and the financing of terrorist activities in the
casino sector. The following ten suggested enhancements speak to this potential improvement. To move the
enhancement of FINTRAC's operational capacity forward, each of the ten suggested enhancements has been assigned
to a FINTRAC office of primary interest (OPI) for the purpose of developing action plans for implementation which should
take into account feasibility, direct/indirect costs, timeframes, etc. The ten suggested enhancements (numbered from the
previous section) with corresponding OPIs proposed in bold, are as follows:
Suggested enhancement # 4: FINTRAC, specifically ROC, enquire with each casino (REs) that demonstrated a spike in
STR re P Q rl i n oafte r May 2008; conduct research to determine the causes of the spike in reporting; provide a report to the
|'--. 1l@jil)X&' ^M!^j | of the general findings once the research is completed. -
Suggested enhancement # 5: Further action be taken by FINTRAC to enhance the analytical valuetfjnformajior^
S. 14 ATIA
provided in Part Got the STR by those casinos in the provinces identified in this report, specifically j
- FADD
Suggested enhancement # 6: Further investigation is required by FINTRAC into the reasons why there is
such a lack of information in respect of the name of the individual conducting the transaction (as well as
other information with high analytical value) in Part Dot STRs especially in the casef"
- ROC

Protected A
Suggested enhancement # 8: Given observations made about the significant deficiencies in certain
casino REs in the quality and value-added of their reporting to FINTRAC, it is suggested that the feasibility
of conducting more frequent examinations of at-risk casinos be considered. - ROC
Suggested enhancement # 9: Alternative compliance examination methods (for compliance purposes) should be
researched with other government departments and the Department of Justice to determine if any new opportunities in
verification methods. S. 16(1)(c)&21(1)(a),(d)ATIA
Suggested enhancement # 11: The results of the specific VIR analysis completed a^part of_thjs_report and future
periodic analysis of VIRs with references to casino or gaming be shared with ROC, S. 16(1 )(c) ATIA
"land EXCO. - FADD
Suggested enhancement # 21: Increasing the priority given by FINTRAC to the detection and deterrence
of ML/TF using the casino sector. -FADD
6.2 Proposal for a National Casino Sector Initiative

Of the twenty-four suggested enhancements made in this report, fourteen are items requiring consultation and further
engagement of partners and stakeholders. These suggested enhancements are as follows:

Protected A
Suggested enhancement # 23: Encouraging casinos to opt for batch reporting as a more effective
method in providing better quality data to FINTRAC. - ROC
S. 21(1)(a)l(d)ATIA
Externally, it is essential to have a coordinated National Casino Sector Initiative involving partners and stakeholders who
have an operational, policy and/or legislative involvement in maximizing the detection and deterrence of ML/TF in the casino
sector. These key partners/stakeholders include (but are not limited to) FINTRAC, provincial regulators, casino REs, police
forces, other law enforcement, the Department of Finance, the Do J, the PPSC, provincial Crown prosecutors and the CRA.
Hence, in order to present a more coherent picture to partners and stakeholders in a consultation discussion, we have
grouped the above fourteen externally oriented suggested enhancements within a framework of a National Casino
Sector Initiative, furthermore,.because the current report is not intended to be shared externally, a separate document
entitled-' il@P)]() &. ^(JtOIPP^-1)) ;'v i; '^ I That document is the proposed
discussionoocumennoDesnare^
The Proposal for a National Casino Sector Initiative comprises five strategic priorities. They are as follows:
1. Enhanced Legislation, Regulation and Policy
2. Enhanced Compliance,
3. Enhanced Detection and Analysis,
4. Enhanced Enforcement, and
5. Proactive Communications.
Strategic Priority #1: Enhanced Legislation, Regulation and Policy

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Outline FIKTMC ' CANAIE
Breakdown of FINTRAC cases by type

Types of predicate offences
Money laundering methods and techniques related
to suspected drug offences
Money laundering methods and techniques related
to suspected fraud offences
Comparison of money laundering activities related to
drug and fraud offences
Money laundering case examples
A-2012-00014 - Doc#412028
,
Breakdown of FINTRAC cases

by type FIMTMC t ONAH
Disclosures j 2007-08 2008-09 2009-10 2010-11

by type
474 470 626 1741
73 103 257
36 48 124
556 579 777 2122
H
UNCLASSIFIED" i, .
This slide provides a breakdown of cases by type...

As you can see, pure ML cases accounted for over 80% of all cases disclosed by
FINTRAC between 2007 and 2011.
It is therefore not surprising that many of our cases have been disclosed to law
enforcement agencies (with about 60% to RCMP and 20% of cases going to
provincial and municipal police services)
A-2012-00014 - Doc#412028
On this slide, you can observe the breakdown of predicate offences related to all cases disclosed
by FINTRAC from April 2009 to March 2011. Stats from the previous two years are also available in
the report...but since they have not changed that much over the years, I have opted to show only
the stats for the last two years.
As you can see, suspected fraud and drug-related offences are the most common. The unknown
category represents cases where the pattern of financial activity, or other info available to
FINTRAC, suggested ML but the predicate offence was unknown or not identified.
Since most of our ML cases relate to suspected fraud and drug offences, the remaining slides will
focus on ML trends and typologies that FINTRAC has observed in relation to such cases.
A-2012-00014-Doc#412028
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General observations regarding
suspected ML drug-related cases RKTIAC ONAH
Production and/or trafficking of marijuana and

cocaine were the most commonly suspected drug
offences between 2007 and 2011
Organized crime groups were suspected to be

involved in at least 28% of all drug-related cases
Sample of 2010-11 drug-related cases revealed that:

> Majority of suspected offenders were middle-aged men
> Most common "declared" occupation was business owner
in the service sector
> Second most important occupation related to trades
.:' " 'SB"

3IFIEQ,
Of all cases involving suspected drug offences, the production and/or trafficking
of marijuana and cocaine were the most common...varied between 15% and
30% of cases in the last four years.
This compared to about 5% of cases involving the trafficking of ecstasy or
heroin.
During the same period, OC groups were suspected to be involved in at least

28% of all drug-related cases
A sample of 2010-11 suspected ML drug-related cases, revealed that the

majority of suspected offenders were middle-aged men.
Women who were involved were generally linked through familial relationships
and they held jobs in the food, retail or services sectors...or they were
homemakers or unemployed.
The most common "declared" occupation by suspected offenders was
"business ownership" mostly in the service sector (e.g. Restaurant/bar, real
estate, financial services, travel agencies, beauty salons and so on); others
were reported to be in the "trades" sector (e.g. Carpenter, electrician,
plumber...)
A-2012-00014-Doc#412028
ML methods and techniques
commonly observed in suspected FIKTIAC I CAHAH
drug-related cases
Structuring and smurfing

Commingling
Currency exchanges
Refining
Use of casino value instrument (mostly casino
chips)
Use of international electronic funds transfers
(EFTs)
f r t e ^ ^ a ^ f e f t ^ e r ^ ' ' - --unclassified =jjî
A) Structuring & smurfing were commonly observed and...

Included cash purchases of EFTs under the reporting threshold and were sometimes
conducted by different but associated individuals (smurfing)
Cash purchases of bank drafts or money orders under $1,000 (which does not require and
ID)
Deposits of $20 bills in amounts under the $10,000 reporting threshold were also linked to
such cases
B) Commingling
Businesses and their bank accounts were used to commingle legitimate and illicit funds in a
number of cases
Sometimes one business had multiple accounts and funds were moved between those
accounts
C) Currency exchanges were also common

From USD to CAD or vice versa (sometimes structured under the $10,000 reporting
threshold)
Currency exchanges sometimes followed by EFTs
There were also instances where large cash deposits in CAD were converted to USD...and
wired to countries known for drug trafficking
D) Refining
A-2012-00014 - Doc#412028
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Types of businesses used in

suspected ML drug-related cases HKTMC ' rjUUft
Possibly U9ed to further criminal activities or money
laundering:
Shipping/freight
Import/export
Pharmaceutical
Hydroponics/indoor gardening
Trucking
Possibly used for placement or layering stage of ML

Money services businesses
Travel agency
Convenience/grocery store
Food and entertainment
Gas station
Wmim' (UNCI
Between 2007 and 2011, 68% of drug-related cases involved at least one business
which was not necessarily a cash-based business...as you can see from the list on this
slide.
First set of businesses were suspected to be used to further criminal activity or to

launder criminal proceeds
For example, a shipping/freight company could be used to move drugs...but it could
have also been started with criminal proceeds (therefore integration stage of ML) and
only use for legitimate purposes...at the same time, it could have been used for both
illegal and legal purposes.
2nd set of businesses were suspected to be used for the placement or layering stage
of ML
A-2012-00014 - DodM 12028

/

suspected ML drug-related cases mmtAc i canah
(cont'd)
Possibly used for the layering or integration stage

of ML:
Construction/real estate development
Real estate
Electronics
Auto industry
IH
These businesses were suspected to be used in the layering or integration stage of

ML...the latter is pretty obvious!
On the other hand, layering stage would involve the movement of funds between
business accounts to make it appear as legitimate purchases (e.g. Real estate, cars and
electronics)...but not real purchases are really madel
A-2012-O0014 - Doc#412028
Top destination or originating
jurisdictions of EFTs related to mnuc i canafe
suspected ML drug cases
1. United States of America j 9. Belarus

2. India 10. Latvia
3. Vietnam 11. Switzerland
4. Hong Kong 12. Mexico
5. China 13. Peru
6. Taiwan 14. Israel
7. Iran 15. Thailand
8. United Kingdom
: r. i i j B - ' . > . . - f t T | ^ U N C t A S S I
Some countries known for being part of drug trafficking routes, entry points or having
drug markets:
India
Vietnam
Iran
Belarus (drug trafficking is the primary source of illicit proceeds in that country)
Mexico
Peru (major cocaine producer)
Thailand
China (source of precursors for some synthetic drugs)
Other countries are financial hubs which have strong ties with Canada:
United States
United Kingdom
Hong Kong
Switzerland
10
A-2012-00014 - Doc#412028
FIMTIAC I CAHAfE
Money laundering methods and techniques

related to suspected fraud offences
.j ,.'->':.;.. .,-
'*''2a3*JS2^ " .:! UNCLASSIFIED
Let's now look at the ML trends related to suspected fraud cases.
A-2012-00014 - Doc#412028
General observations regarding
suspected ML fraud-related cases FIHTIAC l CANAK
Investment/securities fraud was the most prevalent

between 2007 and 2011, followed by mass
marketing fraud, credit/debit card fraud and then
mortgage fraud
However, in 2010-11, credit/debit card fraud and
mortgage fraud moved ahead of mass marketing
fraud
Sample of 2010-11 fraud-related cases revealed
that:
> Majority of suspected offenders were middle-aged men but
about 10 years older than for drug-related cases
> Individuals conducting investment fraud often held
ownership or senior management positions within private
and/or public companies
II :m
UNCLASSIF|t=0^^
%y:.iZ :J-.-,.'-" / ,-:'i;:
Investment/securities fraud was the most prevalent between 2007 and 2011,
followed by mass marketing fraud, credit/debit card fraud and then mortgage fraud
However, in 2010-11, credit/debit card fraud and mortgage fraud moved ahead of
mass marketing fraud
During the same period, OC groups were suspected to be involved in at least
12% of all fraud-related cases...lower than for drug cases which was at 28%
Sample of 2010-11 fraud-related cases revealed that:

> Majority of suspected offenders were middle-aged men but were about 10 years
older than for drug-related cases
^-Individuals conducting investment fraud often held ownership or senior
management positions within private and/or public companies
12
A-2012-00014 - Doc#412028
f

commonly observed in suspected HHTMC 1 CANAFE
fraud-related cases
Use of multiple financial institutions and accounts

Use of shell/front companies
Use of international electronic funds transfers
(EFTs)
Use of nominees
Use of credit cards
*;*; i:
A) Use of multiple institutions and accounts was very common in fraud cases
For example, proceeds of fraud were used to purchase bank drafts (issued by one bank)
then deposited in the account of another bank...and followed by a domestic wire transfer
or international EFT to another individual
Similarly, cheques drawn from a business account at one bank were deposited by
individuals into a personal account at another bank...then they purchased bank drafts and
drew personal cheques payable to that first business account
B) Shell/front companies
Individuals registered shell companies in foreign jurisdictions and sent proceeds of fraud to
the foreign bank accounts of those companies
Individuals also used asset management and securities firms as fronts to lure
investors...once money was received from investors, bank drafts were issued to nominees
or individuals
C)EFTs
EFTs were used about 4 times more often in fraud cases than in drug cases
Fra ud proceeds were often sent to bank secrecy or tax haven countries (sometimes going
into business accounts then immediately moved to personal accounts)
13
A-2012-00014 - Doc#412028
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(Ajoieue|dxa-j|as) saaujuiou jo asp (a
suspected fraud-related cases HNTIAC .' CANAfE
Possibly used to commit fraud and/or launder criminal

proceeds:
Holding companies
Financial services (including money services businesses)
Investment/securities
Consulting services
Energy sector
Life insurance
Possibly used for the layering or integration stage of ML

Real estate development
Precious metals
Technology (e.g. aviation, computers, etc.)
Auto industry
UNCLASSIFIED. CariadS
Between 2007 and 2011, 84% (a bit higher than for drug cases) of fraud-related cases
involved at least one business
This slide provides examples of the types of businesses used in fraudulent schemes.
1st of businesses were sometimes used to commit fraud only or to launder criminal
proceeds...or for both.
Of note, in most instances involving life insurance companies, investment-based

policies were purchased with illicit proceeds then quickly redeemed/cashed out
(therefore mostly for the placement or layering stage of ML)
2nd set of businesses were mainly suspected of being used for the layering or
integration stage of ML
14
A-2012-00014 - Doc#412028
jurisdictions of EFTs related to FiimAC < CAHAF!
suspected ML fraud cases (excluding
securities/investment fraud)
1. United States of America 9. Germany

2. United Kingdom 10. Italy
3. Iran 11. Austria
4. Japan 12. France
S. Hong Kong 13. Cyprus
6. Israel 14. Guernsey
7. Switzerland 15. India i
8. China
_ .. _ _ . 71
-..-_., '- -< -: '(.""-'s',:'.".' '"'"."--',","-'.'.' '-"*'*' '-.'.:
J :;"
Financial hubs - US, UK, Hong Kong and Switzerland
Japan - instances of mass marketing fraud
7 European countries-Switzerland, Germany, Italy, Austria, France, Cyprus, Guernsey
Iran, Israel, China and India
15
A-2012-00014 - Doc#412028
jurisdictions of EFTs related to fimtbac i mm
suspected ML securities/investment
fraud cases
1. United States of America 9. Bermuda

2. Netherland Antilles 10. Hong Kong
3. United Kingdom 11. Panama
4. China 12. Dominican Republic
5. Mexico 13. Turks and Caicos
6. Bahamas 14. Barbados
7. Antigua and Barbuda 15. Luxembourg
8. Netherlands
^lûNctASsiFiEir ->
There are seven of the jurisdictions in the Caribbean region, which did not show up at
all in the previous list associated with other types of fraud.
For the exception of the Dominican Republic, most of these countries are tax haven
or have strong bank secrecy laws (e.g. Luxembourg)
16
A-2012-00014 - Doc#412028
NHTIAC V CAHAFE
Comparison of money laundering activities

related to drug and fraud offences
,4iijifc'',.:\-.:\ : ..UNCL^SSJFI|P^ _ S$#>
17
A-2012-00014 - Doc#412028
Money laundering methods /
techniques used in drug versus F1OTMC - CAHAFE
fraud cases
Structuring, smurfing, currency exchanges, refining
and the use of casino chips - more frequently used
in drug-related cases
Use of multiple financial institutions and accounts,
nominees and credit cards - more common in fraud
cases
Commingling and the use of shell/front companies,
and the use of international electronic funds
transfers were used in both types of cases
However, the use of international electronic funds
transfers more frequent in fraud cases
..... .;.,,,.,... .. : ... ...... ....
E I
^MNCLASSIFJED
Structuring, smurfing, currency exchanges, refining and the use of casino chips
seemed to be more frequently used in drug-related cases
Use of multiple financial institutions and accounts, nominees and credit cards
appeared to be more common in relation to fraud cases
Commingling and the use of shell/front companies, and the use of international
electronic funds transfers was used in both types of cases
However, the use of international electronic funds transfers was 4x more

frequent in fraud cases
18
A-2012-00014-Doc#412028
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Similarities and differences between
flows of international electronic FINTRAC ' QUAFF.
funds transfers (EFTs)
Four countries with which Canada has a strong

financial relationship show up in the three lists of
countries
Six countries are unique in the Top 15 list
related to drug-related cases
Another six countries are showing up only in the
Top 15 list related to fraud cases
While nine countries (almost all in the Caribbean
region) are unique to the Top 15 list related to
securities/investment fraud
'ul^&slPil
20
A-2012-00014 - Doc#412028
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Case example (#1) involving a Ponzi
scheme FIKTIAC V CAHAK
n n n
f.u.--.. I ft
ft a
Law enforcement info indicated that 2 individuals (Individuals 1 and 2) were alleged to be
involved in a Ponzi scheme.
An investment company, Company A, managed by these 2 individuals, produced a misleading
brochure containing pictures with VIPs and claiming several investment successes in various
sectors (golf courses, hotels, office buildings, retail malls and mortgage entities operating in
foreign countries).
The website of the company also promissed a 140% return over a three-year period...a typical
scheme!!!
Company A was found to be associated with three other entities (Companies B, C and
D)...one of them was the owner of more companies.
FINTRAC's analysis revealed many large cash deposits in the accounts of Companies A, B, C
and D ...these deposits were often followed by the purchase of bank drafts payable to one of the
associated companies.
The companies were also the beneficiaries of EFTs sent from individuals (most likely victims) in
Canada, the US and other foreign countries.
The companies were holders of accounts in Canada, the US and the Caribbean.
Financial transactions were conducted throughout a 4 year period and totaled about CAS5
million
FINTRAC's analysis confirmed law enforcement's suspicions...and the relevant financial info
was provided to law enforcement to further its investigation.
22
A-2012-00014 - Doc#412028
m
associated with case example #1 hwiac Y **
Use of various financial institutions and accounts,

as well as electronic funds transfers between
various countries, including Caribbean countries
(as shown on slide 16)
Use of various businesses to facilitate money
laundering
Series of financial transactions involving deposits
or EFTs into bank accounts, followed by purchases
of bank drafts or EFTs to the benefit of business
accounts held in different countries
23
A-2012-00014 - Doc#412028
Law enforcement info indicated that an OC group of 19 individuals (many who were family
members) were involved in the production of marijuana using indoor and outdoor grow
operations (referred to as MGOs).
Individual 1 was believed to be in charge of the criminal organization...it was also suspected
that a number of businesses and nominees were used to conceal the organization's assets.
In addition to managing the MGOs, family members were suspected of acting as owners or
directors of companies which, in turn, owned properties where the MGOs were located.
FINTRAC's analysis revealed financial transactions related to most of the individuals and three
fast food companies (1, 2 and 3) owned by Individual 1.
The financial transactions mainly consisted of cash transactions and EFTs which were
conducted over a six-year period and totalled about CA$5 million.
Some members of the criminal organization deposited cash at ATMs and others at bank
tellers...all of it going into personal accounts.
Those deposits were used to pay credit card accounts or were followed by EFTs to individuals
in Asia and Europe.
The same credit cards were then used to purchase casino chips. Cash purchases of casino
chips were also reported to FINTRAC.
In addition, currency exchanges from USD cash (for which the source was unknown) to CAD
were conducted at money services businesses.
One individual exchanged $20 bills into $100 at a bank (so refining technique used in this
24
A-2012-00014 - Doc#412028
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ML methods and techniques ,k
associated with case example #2 nHrwcVcAiWE
Some individuals of the group used ATMs instead

of bank tellers to deposit cash into accounts
Funds were transferred to credit cards accounts
which were then used to purchase casino chips
One individual exchanged $20 into $100 bills (i.e.
refining technique)
Cash deposits were made at different financial
institutions on the same day (i.e. structuring)
Large cash amounts of USD were converted to
CAD
EFTs were sent to individuals in Asia & Europe
25
A-2012-00014 - Doc#412028
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Financial Transactions and Reports Analysis Centre of Canada MEMORANDUM NOTE DE SERVICE
Centre d'analyse des operations et declarations financiercs du Canada
> Security classiticalion Classification de securite
r ~l Protected B
Originator/Telephone number Auteur/Numero de telephone
to A Jeanne M. Flemming Corrie Adams (613-992-8554)

A T Director Our file Notre reference
MEMO (351809), TAB 1: Agenda
(349052); TAB 2 : Minutes (355688);
L_ TAB 3 : Attendees (356215)
r ~l Your file Votre reference
Darlene Boileau PaC-2011-029

Date
deM Deputy Director
Strategic Policy & Public Affairs
L _l
SUBJECT Public Private Sector Advisory Committee Meeting - November 3, 2011
OBJET
ISSUE:
To prepare you for the upcoming Public/Private Sector Advisory Committee

(PPSAC) meeting on November 3, 2011, to be held at the Department of Finance
(Finance), Boardroom 22-A, from 1:00 p.m. to 5:00 p.m., and for your pre-meeting
with Jeremy Rudin on October 31, 2011 at 2:00 p.m..
AGENDA:
The PPSAC agenda is comprised of 7 items:
1) Follow-up to previous meeting;

2) Tour de table;
3) Alastair Bland, Director, Charities Directorate, Canada Revenue Agency (CRA),
will provide a presentation on the CRA's Charities Directorate; __
5) Your presentation on the Trends & Typologies Report, "ML/TF Trends in

FINTRAC Cases Disclosed between 2007/2008 and 2010/2011";
6) Domestic Issues; and
7) International Issues.
The complete agenda for the meeting is attached at TAB 1, and minutes from the last
meeting are attached at TAB 2. For ease of reference, a list of inyitea^ttendees is also
attached at TAB 3. I will accompany you to the meeting and |^j|j| j will join us for
the Trends & Typologies presentation.
A-2012-00014 - Doc# 412612

-2- f
CONSIDERATIONS:
1. Follow-up to Previous Meeting
Given that the first three follow-up items were directed at FINTRAC, Jeremy will ask you
to speak to these items and provide responses to their respective questions. The last
item, MSB representation, is for your information only.
1. ML risks in Canadian real estate market:
Response: FINTRAC does not have any information on this specific issue, and it is
unlikely that an in-depth project examining the question would bring significant
results, since:
On the tactical side, only a VIR could inform FINTRAC that a real estate
transaction involving foreign money is suspicious and if the threshold is met,
triqqer a case disclosure. s. 16(l)(c) ATIA
Further, FINTRAC does receive reports of incoming transactions where

monev is sent from a foreiqn account to the Canadian real estate sector.
We have also been in touch with CMHC and they have confirmed that they do not
have any information on this issue. Statistics Canada has also indicated that they
do not have reliable data on this issue either.
2. Sanction lists: During the Public Safety (PS) presentation on the terrorist listing
A-2012-00014-Doc# 412612
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Your presentation, with speaking notes, will be provided to you and will take
approximately 20-25 minutes, with an additional 10-15 minutes for comments and
questions.
4. Domestic Issues (Finance will be presenting)
Finance will provide an update on the Parliamentary Review process.
5. International Issues (Finance will be presenting)
Finance will provide updates on developments at the Financial Action Task Force
(FATF), more specifically on the countries of concern at the International Co-operation
Review Group (ICRG), the review of the recommendations in preparation for the 4th
Round of Mutual Evaluation, and an upcoming public consultation meeting with the
private sector.
With respect to the 4th Round of Evaluation, the review of recommendations is_adyancing
well.
few Recommendations have yet

^bel!naTze^!s^}sôns will continue at the October 24-28, 2011 Plenary Meeting.
In addition, the FATF, which has held electronic consultations with the private sector
over the summer, will also host a consultation meeting with the private sector, most likely
on December 7-9, 2011. Finance will encourage the Canadian private sector to actively
participate in this meeting.
PPSAC PRE-MEETING:
On October 31, 2011 you have a pre-meeting with Jeremy Rudin at 2:00 p.m.
In addition to the PPSAC agenda items, you may wish to raise the following items:
Parliamentary Review
A-2012-00014 - Doc# 412612

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ROC
Suggested Enhancement #2: Understanding LCTR Variation
Office(s) of Primary Interest: Office(s) of Secondary Interest: Completion Date:
Considerations:
[] Legislative O Regulatory Policy PI Administrative X Internal Operational
1. Proposal Description: Conduct enquiries and research for compliance purposes to understand the specific variation in
the volume of LCTRs reported and future variations and share these with the Intelligence Sub-Committee, Intelligence
Committee and EXCO periodically.
2. Background and Rationale: Enhances FINTRAC's internal operational capacity and relates to Priority #2 (enhanced
compliance) and Priority # 3 (enhanced detection and analysis).
3. Feasibility / Options Analysis: Research and analysis capacity is currently being developed within ROC. ROC could
undertake such type of research and analysis. One option would be to conduct periodic analysis (every quarter) of the volume
of LCTRs reported and provide the findings to the forums noted in Section 1. Further, ROCjn its communication strategy, will
go back to Reporting Entities to provide them with feedbacks as part of the consultation process in relation to the key findings.
Adjustments to ROC's enforcement strategy could be made once the results are analyzed and clearly understood.
4. Impact on FINTRAC: Overall, there is no impact on FINTRAC's ongoing business.
5. Impact on Partners: No immediate impact as this is mostly an internal proposal to enhance FINTRAC's understanding of
variations in the volume of LCTRs. However, if there is a need to conduct enquiries to better understand specific variations in
the volume of LCTRs reported, REs could be solicited.
6. Legal Implications: There are no legal implications regarding the internal process of this proposal. However, if there is a
need to conduct enquiries with REs to better understand specific variations in the volume of LCTRs reported and in the
process by which ROC gathers information under its compliance powers, ROC may or may not be able to share all this
information with the forum noted in Section 1. Again it is too early to make this determination. Section 58 (1)(b) of the Act
gives the Authority to the Centre to conduct research into trends and developments in the area of money laundering and the
financing of terrorist activities. This provision of the Act certainly applies here in this context.
7. Policy Implications: From a policy perspective, this proposal is feasible and does not contravene current ROC policies
and procedures.
8. Costing: The sole source of funding for this initiative would be the base budget. (T.B.D.)
SOOOs' 2009/10 2010/11 2011/12 2012/13 2013/14 Total
The costs and resources that may be required to conduct a proper strategic evaluation and subsequent analyzes will depend
of the scope of the research, the outcomes of the analyses of the key findings and the level of changes that may be required
to address the issues. Most likely, a FINTRAC's Task Force may have to be put in place in order to achieve its objectives. A
project evaluation should be conducted to evaluate and address resources allocation.
9. Implementation Considerations: While ROC may have the capacity to conduct the research part of this initiative, |j|
s. 16(l)(c); 21(l)(a) ATIA
"1, other than internal enquiries. Capacity is dependant on
investments in research tools and access to data.
CORPORATE-#266021 -v2-Casiiio_Strategy_Templates_(PCI).DOC
A-2012-00044 - Doc# 436874

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PROTECTEDA
Detecting and Deter rim

Money Laundering
and
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Casino
RDIMS #162508

COMMERCIALLY SENSITIVE INFORMATION
PROTECTEDA
Presentation Overview:
Statistical Overview
Reporting Statistics
Disclosure Statistics
Review of Suspicious Transaction
Reports (STR)
Sanitized Case

mux. \ (ANSI
A-2012-00044 - Doc# 436882

PROTECTED A
REPORTING STATISTICS

'KTLK I OUttlt
PROTECTED A
STR Volume
Suspicious Transaction Reports (STR) by Fiscal Year
i Other Sectors STR
Fiscal Year

COMMERCIALLY SENSITIVE INFORMATION 'KTUC I CAJUIt
A-2012-00044 - Doc# 436882

PROTECTED A
STR Volume
STR Comparison

TKTUf. r turn
PROTECTED A
LCTR Volume
Large Cash Transaction Reports (LCTR) by Fiscal Year
a O!har Sectors LCTR i Casino LCTR

A-2012-00044 - Doc# 436882

PROTECTED A
LCTR Volume
LCTR Comparison
'"' 'I \
2003-2004 -
2004-2005 -"
I
_-' '
2005-2006 -*
2Q06-2007 TO
Othn s!c<?
Casrw

COMMERCIALLY SENSIT fVE INFORMATION J
TWttC (JUWE 7
PROTECTEDA
EFTR Volume
Electronic Funds Transfer Reports (EFTR) by Fiscal Year
Other Sectors EFTR Casino EFTR
*
16.000.000 9
a
jjj 14.000.000 - 7
u 12,000.000
6 t
g 10.000.000 5 !
5 8,000,000 4
^ 6,000,000 3 o

| 4,000,000
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'o r ' jo D o S C *O ^ g O ^ S o c *O 0r *
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NOT FOR FUR THER DISTRIBUTION

COMMERCIALLY SE N S I T T V E I N F O R M AT I O N 1UC ^ CAHUE 8
A-2012-00044 - Doc# 436882

/
PROTECTED A
EFTR Volume
EFTR Comparison

COMMERCIALLY SENSITIVE INFORMATION 6
=KTMC > UKME
PROTECTED A
All Reports Volume

All Reports by Fiscal Year
I Other Sectors
25.000,000 -|
20.000.000 -
S
a i5,ooo,coo
fe 10.000,000 \

o
5,000,000 A
Fiscal Year

BftUf. ' U.WJE
A-2012-00044 - Doc# 436882

r
PROTECTED A
All Reports
All Report Types
Comparison
2002-2003 -fl
2003-2004 -fl
2004-2005 -fl
2005-2006 -^
2006-2007 1
2007-2008
0(ri Sectors
mi'vr;
NOT FOR FURTHER D STRIBUTION

COMMERCIALLY SENSITI\IE INFORMATION
WIIAC 1 UXAIE 11
PROTECTED A
Activity Sector Group Report Volume

Number of Reports by Reporting Entity Sectors (2007-2008)
1CO.COO.000
10.C00.0O0
z "
Financial Entities Money Service Others (Casinos, Life

(Barks, Credit Unions, Businesses Insurance, Real
Caisses Populates, Estate, Securities
Trust and loan Dealers and Others)
Companies)
Entities
NOT FOR FURTHER DISTRIBUnON

WWC^ttHME
A-2012-00044 - Doc# 436882

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PROTECTEDA
Common Errors-All Reports

Error #1 - Noise Words:
In many reports, unacceptable information (e.g., "NA", Not
applicable", "Unknown", etc.) is being provided in report fields.
Guidance:
If the information is not available from the moment of the transaction
or in your records and it is not a mandatory report field, leave the
field blank.
NOT FOR FURTHER WSTRBUTtON

nam roan 15
PROTECTED A
e
Common Errors - STR and LCTR
Error #2 - Sum of Disposition Amounts:

In many reports, the transaction amount does not equal to the sum
of its disposition amounts.
Guidance:
The information provided on the total amount received to start the
transaction should be equal to the information provided on where
the money went (as one or more dispositions).

rm * euro
A-2012-00044 - Doc# 436882

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PROTECTED A
Involvement of Casinos in Disclosures

All Case Types

TKTUC UUUIt 23
PROTECTED A
Disclosure Report Volume
Onclcturt Rtport Ostribution by Typ and Fiscal Y*ar Dltdoture Rtoon Distribution by Tyeo and Fhcal Ytar
Othar Sctor -
-Casino -

WlttC UJWi
12
A-2012-00044 - Doc# 436882
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PROTECTED A
STR REVIEW
NOT for further distribution

mat fttug 27
PROTECTED A
Review of STRs in Cases from

Casino Sector
Large cash in, cash out within a
short time period
Individual(s) purchase large volumes of
chips with cash, conduct limited
gambling activities and cash out with a
casino cheque.

BCTMt i cum
14
A-2012-00044 - Doc# 436882
PROTECTED A
ft
Casino Sector
Use of Nominees- Multiple
transactions for the benefit of an
Individual
An individual provides cash to a number
of people to "gamble"on his/her behalf.
These individuals cash out and request
casino cheques payable to the original
person.
NOT FOR FURTHER OISTRI8UTION

numc t iwii 29
PROTECTEDA

Casino Sector
Appearing to intentionally lose to
party when betting against other
players in even-money games
Group of individuals will enter the casino
separately, and compete in a
community game (i.e. poker).
Individual(s) will intentionally loose to
increase partner's winnings.
NOT FOR FURTHER OJSTRBUTtON

wrote * ttwit
15
A-2012-00044 - Doc# 436882
PROTECTEDA
SANITIZED CASE

ssmt ? wan
PROTECTEDA
A foreign financial intelligence unit (FIU) in Country X

reported to FINTRAC that Individual 1 was under
investigation for fraud and money laundering.
According to the FIU, Individual 1, a Canadian resident,
was the holder of a bank account in Country X. Large-
scale international EFTs were received into the account
and shortly after, the funds were transferred back
abroad, the same activity was observed in the bank
account of Individual 2, who was identified as the
spouse of Individual 1. When questioned, individual 1
indicated that these funds were used for repayment of
loans.
Individuals 3 & 4, family members of Individual 1, were
also reported to be under investigation.
NOT FOR FURTHER OKTRBBUTtON

faux i asm 32
16
A-2012-00044 - Doc# 436882
PROTECTED A
According to information provided by Canadian law enforcement,

Individual 1 was suspected to be a reputed leader of an
organized crime group, collaborating with other organized crime
groups, and was previously convicted of a number of criminal
offences.
FINTRAC database revealed that during a 3 and a half year
period, 15 suspicious transactions reports (STRs) and a number
of LCTRs were submitted to FINTRAC by the casino sector
which identified Individual 1 and five associates suspected of
laundering illicit proceeds through casinos. Of the 15 STRs, 10
were reported during a period of two months.
The review of STRs, LCTRs and available open source, reveals
that Individual 1 was associated (by financial transactions,
same address, same phone number, etc) to other individuals
conducting similar transactions at casinos.
According to an STR submitted by a casino, Individual 1 and
his associates used large amounts of cash (often in $100
denomination) to purchased casino chips, play slot machines,
and then requested that cheques be issued for their winnings. In
general, all the associates requested that cheques be issued in
the name of Individual 1.

33
PROTECTEDA
The STR also indicated that the total

value of cheques issued to Individual 1
did not necessarily represent winnings
from gaming activity.
In addition to the STRs and LCTRs,
FINTRAC's database also contained:
- A large number of EFTs that were ordered by Individual 1 for
his/her own benefit (i.e. from accounts in other countries to
accounts in Canada, or vice versa). Individual 3, located in
Country Y, also ordered EFTs for the benefit of Individual 1.
- Exportation and importation of currency by Individual 1 and
Individual 4 respectively
- Transactions involving Individual 1 and his/her associates
totalled over $11 million CAN. Other types of transactions
included the purchase of bank drafts, certified cheques,
deposits of cash and personal cheques, withdrawals and
currency exchanges.
farm rtwwi 34
17
A-2012-00044 - Doc# 436882
PROTECTEDA
Information received from the casino sector was crucial

in the analysis of the activities of the principal of this
case, Individual 1, as well as of his close associates.
NOT FOR FURTHER OISTRIBUTtON

35
PROTECTEDA
Indicators
FIU Interest in individual with
respect to Money Laundering
Rounded Sum transactions
Customer requests cheques that are
not for gaming winnings
NOT FOR FURTHER OtSTRtBUTtON **&i

18
A-2012-00044 - Doc# 436882
Protected fX
ROC
Suggested Enhancement #6: Account for Lack of Information in Casino RE Reporting
Considerations:
f~l Legislative f~l Regulatory D Policy X Administrative X Internal Operational
1. Proposal Description: Further examine the reasons for a lack of information with respect to the name of individual
conducting fransaction (as w^Hasotjier^ .p\ jn parf D&PartG of STRs especially in the
2. Background and Rationale: Relates to Priority #2 (enhanced compliance) and Priority #3 (enhanced detection and
analysis).
3. Feasibility / Options Analysis: This work can be undertaken within ROC and is highly feasible. An option would be to
incorporate a review and analysis of Part D and Part G of STRs into the scope of future casino examinations and/or other
casino compliance enforcement actions.
4. Impact on FINTRAC: Overall, there is little impact on FINTRAC's ongoing business.
5. Impact on Partners: There will be little impact on REs as this work would be conducted as part of regular compliance
activities.
6. Legal Implications: No legal implication. Section 58 (1)(b) of the Act gives the Authority to the Centre to conduct
research into trends and developments in the area of money laundering and the financing of terrorist activities. This provision
of the Act certainly applies here in this context.
7. Policy Implications: From a policy perspective, this proposal is feasible and does not contravene current ROC polici
icies
and procedures.
8. Costing: The sole source of funding for this initiative would be the base budget.
SOOO's 2009/10 2010/11 2011/12 2012/13 2013/14 Total
9. Implementation Considerations: Casinos will be selected for a compliance examination and/or other compli
lance
enforcement actions using the current processes that are in place for this purpose.
10. Risk Management: N/A
N/A
11. Recommended Action(s): Include a review and analysis of Part D&PartG of STRs into the scope of future casino
examinations and/or-other compliance enforcement actions. ROC will also be including the examination of all reports such as
LCTRs and CDRs. The casino sector is a high risk sector that is being currently closely monitored. Online casinos, as soon
as the Regulations are modernized by DoF will also be the subject of close monitoring because e.gaming has been
determined to be at a higher risk to ML/TF activities.
255684
2012-00044-Doc# 436874
Protected A
ROC
Suggested Enhancement #4: Research Spike in STR Reporting after May 2008
Considerations:
Policy Administrative X Internal Operational
n Legislative Regulatory
1. Proposal Description: Enquire with each casino that demonstrated a spike in STR reporting after May 2008 and conduct
research to determine the causes of the spike in reporting and provide a report to the Intelligence Sub-Committee and
Intelligence Committee of the general findings once the first phase of the research is completed. The close monitonng of
STRs will be ongoing and issues will be addressed with Reporting Entities once key findings are determined.
2. Background and Rationale: Enhances FINTRAC's internal operational capacity and relates to Priority #2 (enhanced
compliance) and Priority #3 (enhanced detection and analysis).
3. Feasibility / Options Analysis: Research and analysis capacity is currently being developed within ROC. ROC could
undertake such type of research and analysis. One option would be to conduct an internal research to determine the causes
of the spike in STR reporting after May 2008 and provide the findings to the forums noted in Section 1.
i. l6(l)'C};21{l)(a)ATIA
4. Impact on FINTRAC: Overall, there is little impact on FINTRAC's ongoing business. However,
5. Impact on Partners: No immediate impact as this is an internal proposal to enhance FINTRAC's understanding of the
causes of the spike in STR reporting after May 2008. However, if there is a need to conduct enquiries to better understand
5.16{1)(C); 21{l)(a) ATIA
these spikesj
6. Legal Implications: No legal implication. Section 58 (1 )(b) of the Act gives the Authority to the Centre to conduct
research into trends and developments in the area of money laundering and the financing of terrorist activities. This provision
of the Act certainly applies here in this context.
7. Policy Implications: None.
8. Costing: The sole source of funding for this initiative would be the base budget.
2009/10 2010/11 2011/12 2012/13 2013/14 Total

SOOOs'
9 Implementation Considerations: While ROC may have the capacity to conduct the research part of this initiativea$jjgH
s. 16(l)(c);21(l)(a)ATIA |. Capacity is dependant on
invesuTientsinresearcn tools and access to data.
10. Risk Management:
N/A
12 Recommended Action(s): Subject to investments in research capacity, conduct internal research to determine the
causes of the spike in STR reporting after May 2008 and provide the findings with the Intelligence Sub-Committee,
Intelligence Committee and EXCO.
255684
A-2012-00044 - Doc# 436874

Document released under the
A-201"0017 Access to information**
ResponsetoATiRl3c^st*20istfj^bjlgueen vertu de la
Loi sur I'acces a [Information
For the purpose of the above-noted Access to Information request, the locations in BCare: Aldergrove,
Delta, Richmond, Surrey, and Vancouver.
Response to Part 1 of the request
* Please note the following caveats for the table below.
The currency seizure amounts have been converted into Canadian dollars.
The currency amounts do not reflect the total amount seized for each report. Some seizure
reports could have several different denominations in the total.
Total seizures: 445
Issue Country Name Total $ (CAD)

Argentina Peso 795.51
Australian Dollar 56303.49
Canadian Dollar 4665840.00
Ethiopian Birr 0.27
Euro 120633.98
Hong Kong Dollar 154850.58
Iranian Rial 4524.20
Israeli New Shekel 2324.08
Japanese Yen 4532.43
Kuwaiti Dinar 143.84
Malaysian Ringgit 1787.94
Mexican New Peso 59.62
New Taiwan Dollar 5161.11
New Zealand Dollar 118.48
Pataca 172.11
Phillipine Peso 372.70
Pound Sterling 51157.86
Qatari Rial 1107.07
Rupiah 1286.48
Singapore Dollar 3608.86
South Korean Won 7608.67
Swedish Krona 8.97
Swiss Franc 14866.50
Thailand Baht 326.80
RDIMS 450753
A0000077 1-000001
A-2013-00017
Document released under
Access to 7T?ati'OJ3ci4ttted
UAE Dirham 2469.22 uocument aivuigue en vertu

US Dollar 2381621.41
Yemeni Rial 0.09 Loi sur Faeces a (Information
Yuan Renminbi 230795.27
Total: 7,712,477.54
Response to Part 2 of the request
*Please note the following caveats for the table below.
The total cross-border currency report (CBCR) amounts are in their original currency and have
not been converted into Canadian dollars.
The CBCR currency amounts do not reflect the total amount declared for each report. Some CBCR
reports could have several different denominations in the total.
The CBCR reports include currency from any country as well as any monetary instruments which
for these purposes means the following instruments in bearer form or in such other form as title
to them passes on delivery, namely,
(a) securities, including stocks, bonds, debentures and treasury bills; and
(b) negotiable instruments, including bank drafts, cheques, promissory notes, travellers' cheques
and money orders, other than warehouse receipts or bills of lading."
Total Reports: 10,471
Currency Total*
AED 127097
ALL 5200
AUD 1115948.57
BBD 0.91
BDT 22500
BRL 1800
CAD 168425762.2
CDF 50900
CHF 529320
CHW 46400
CLP 42000
CNY 6390955.5
COP 10000
RDIMS 450753
A0000077 2-000002
A-2013-00017
Access to InformatiOifaMJd
COU 29500 Document divulgue en vertu de la
CSD 22000
CYP 20175 Loi sur I'acces a înformation
CZK 407100
EGP 30000
EUR 3000124.5
FJD 44210
GBP 424912.9
GNF 64000
GRD 13300
HKD 9157262
HRK 5110
IDR 30658558.79
ILS 870
INR 32247626
IRR 46394500
JOD 2700000
JPY 190484663
KPW 315
KRW 26828646
LBP 5300
MAD 620
MKD 7420
MMK 17000
MOP 1330
MXP 60716
MYR 27248
NGN 360520
NOK 201000
NZD 77877.19
PHP 5393621.91
PKR 550
PLN 20000
QAR 20489
ROL 82.3
RON 5910
RSD 210015
RUB 37523.95
RUR 32850
SAR 94189.5
SEK 410130
RDIMS 450753
A0000077 34100003
A-2013-00017
Access to lnformaticm&$& ^
SGD 336259.83 ument aivuigue en vertu ae la
THB 167475
TRY 2259 Loi sur I'acces a iinformation
TWD 645373
UAH 169057
UGS 141390
UGX 15000
USD 136034135.7
USN 102200
USS 10510
UYI 30000
UYP 186342
UYU 13000
UZS 17540
VND 12272170
vuv 1165700
ZAR 807100
ZMK 3942500
*Amounts represent totals in currency, not in Canadian dollars.
RDIMS 450753
A0000077 4-000004
Sector Profile
Casino
2009-2010
RDIMS # 232276
Prepared by: Casinos Working Group

Date: 2009/12/23
AT I P doc# 382757 0001

Protected B
Sector: Casino
1-Background and Sector Overview

Definition of sector under the PCMLTFA
For the purposes of the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act and Regulations, "Casino" means a person or entity that is
licensed, registered, permitted or otherwise authorized to do business under any
of paragraphs 207(1 )(a) to (p) of the Criminal Code and that has an
establishment
a) that the person or entity holds out to be a casino and in which roulette or card
games are carried on; or
b) where there is a slot machine, which, for the purposes of this definition, does
not include a video lottery terminal.
It does not include a person or entity that is a registered charity as defined in

subsection 248(1) of the Income Tax Act and is licensed, registered, permitted or
otherwise authorized to carry on business temporarily for charitable purposes, if
the business is carried out in the establishment of a casino, for not more than two
consecutive days at a time under the supervision of the establishment.
Para. 16(l)(c) ATIA
Currently, only 2 reporting entities, British Columbia Lottery Corporation and

Lotto Quebec offer online gaming activities.
The casino sector has been covered under the PCMLTFA since 2000.
Size and segmentation
The Casinos sector has 39 REs with 109 locations in 9_provinces and 1 territory.
The Canadian Gaming Association reports that the gaming industry contributes $15.3
billion to the economy directly, with most of this revenue ($8.6 billion or 57 per cent)
going to government programs and services, as well as to charities. It is important to
note that the RE turnover rate is non-existent.
RDIMS #232276
AT I P doc# 382757 0002

\
Protected B
Segment Segment Segment Segment Total

Province REs
"A" "B" "C" "D" Locations
Alberta - 24 3 2 29 23
Saskatchewan - 7 - - 7 2
Yukon - 1 - - 1 1
Manitoba - 4 - - 4 3
Ontario 4 6 17 2 29 4
Quebec 4 - - - 4 1
Nova Scotia - 2 - - 2 1
New Brunswick 1 1 1
Prince Edward - - -
1 1 1
Island
TOTAL 12 59 33 5 109 39
The casino sector is comprised of 4 segments
Group A: Full service casinos offering slots, table games and credit/front money
accounts.Jrepresents 11.0% of all locations)
This segment incorporates all casinos that operate slots and tables including credit and
front money accounts. Casinos in this segment are the most likely to encounter the most
instances of having to meet FINTRAC's legislative requirements such as record keeping,
client ID. third partv determination and reporting.
Group B: Full service casinos offering slots and table games (represents 54.1% of
all locations).
This segment incorporates all casinos that operate slots and tables but do not offer
credit/front money accounts. Casinos offering both slots and tables are likely to
encounter the most instances of having to meet FINTRAC's legislative requirements
such as record keepinq, client ID, third party determination and
RDIMS U 232276
ATIP doc# 382757 0003

Protected B
Group C: Racinos - Slots and Charity Casinos with slots only (represents 30.3% of
all locations).
This segment incorporates casinos that only have slot machines. Traditionally, the
average slot players do not meet the thresholds for LCTRs therefore do not trigger
FINTRAC's legislative requirements such as record keeping, client ID, third party
determination and reporting. Para. 16{l)(c) ATIA
Group D: Seasonal (represents 4.58% of all locations)

This segment incorporates casinos that are not permanently established throughout the
year. Casinos in this segment only operate for short periods during the year such as
during a fair or an exhibition. These temporary casinos are normally limited to table
games with very low maximum betting limits which makes this segment very unlikely to
reach record keeping, client ID and reporting requirements.
Governance and MOU
The Criminal Code of Canada delegates the authority to oversee licensed gaming
activities to the provinces. Each province sets its own gaming policies that are
administered by provincial commissions or authorities. (See appendix B - Regulatory
environment details)
2- Sector in Review (last 3 years)
Promotion
Given the relatively small size of this sector, guidance has been often provided on a one
on one basis as required. Reporting Entities are all familiar with their FINTRAC regional
officer and information is shared regularly.
1. Feedback presentations are shared with larger casinos once a year in order to
ensure they continue to meet their obligations while increasing the quality of the
information (reports) they provide to FINTRAC.
2. All casinos in this sector have been consulted at various stages in regards to the
development of the Casino Disbursement Report (CDR) and the related guideline
which came into force September 28,2009.
3. The Director gave a speech at the Canadian Gaming Regulators Association

(CAGRA) annual conference in 2009.
4. A FINTRAC officer presented at Canadian Association of Casino Security
Directors (CACSD) conference in May 2009.
RDIMS # 232276
AT I P doc# 382757 0004

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9LZZZZ XSmKM
'100Z PUB 900Z u! saouajajuoo |enuue

ViJOVO 'b sajspdn oVcdlNH 9abB pue ui 'pajedpjjjed jaoyjo ovyiNId V '9
g papajojd
Protected B
Monitoring and Enforcement

QTV:
The chart below shows the reporting volume for the Casino sector over the last 3 years.
The chart below shows the number of RRFAs as well as the number of associated
reports that have been sent for correction to the Casino sector over the last 3 years.
Compliance examinations:
Below is the number of examinations completed by region for the last 3 years in the
casino sector:
The chart below show the average number of deficiencies found during those
examinations :
RDIMS #232276
ATIP doc# 382757 0006

Protected B
Some of the main findings from 2008-09 were:
Compliance Questionnaires:
Below are the statistics regarding the Compliance Questionnaires that were sent in this
sector. The CQs (all paper based) were sent in 2004.
RDIMS # 232276
ATIP doc# 382757 0007

Protected B
After analysis of the answers, the percentages on the compliance regime elements (% of
REs that meet the criteria) compared to the average of all sectors are as follows:
Penalties and Non-Compliance Disclosures

AMPs:
Para. 16(l)(c) ATIA
Non-Compliance disclosures:
Para. I6(l)(c) ATIA
Other
A FINTRAC Casino sector strategy was implemented and it focused on a strategy to
maximize the detection and deterrence of money-laundering and terrorist financing in the
Casino Sector. The Centre also recently completed a Trends and Typologies report for
this sector.
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3- Compliance Expectations
Position of the sector on the Compliance Continuum
(See appendix A for details on each stage of the continuum)
After reviewing the sector size, regulator/association presence and compliance activities,
it has been.flgjermined that the current position on the Compliance Continuum for the
Para. 16(l)(c) ATIA
sector is:
Likelihood of Non-Compliance
The likelihood of non-compliance is based on the variety of products and services and
likelihood of having to comply with FINTRAC's legislative requirements.
Considering the elements of appendix C the likelihoodoMTon-compliance for the

Casinos sector has been determined to be:G|2" K1"''* '"
Consequence of Non-Compliance
The consequence of non-compliance in this section is based on sector knowledge and
review of the following key intelligence items (see appendix D for additional details):
Royal Canadian Mounted Police (RCMP) report on vulnerabilities in the casino

sector in Canada.
Asia Pacific Group (APG) and Financial Action task Force (FATF) working group
on typologies - Report on ML/TF Vulnerabilities of Casino and Gaming Sector.
Financial Task Force Third Mutual Evaluation on Anti-Money Laundering and
Combating the Financing of terrorism - Canada (February 2008)
FINTRAC 2007/2008 Case Disclosure overview (RDIMS# 174282)
FINTRAC Money Laundering Typologies and Trends in Canadian Casinos
(RDIMS# 237361)
An overview of FINTRAC's case disclosures indicates that of the 210 ML/TF disclosures
made by FINTRAC in 2007/2008, 20.6% of the cases included reports generated from
transactions conducted at casinos. Furthermore, 25 of these cases contained
suspicious transactions conducted at casinos.
Considering the elements of appendix D, the size of the sector and the sensitivity to
ML/TF the consequence of non-compliance for the Casinos sector has been determined
topeff
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A P P E N D I X A - S TA G E S O F C Q M P L I A N C F C O N T I N U U M
Aw a r e n e s s :
FINTRAC's expectations for this stage are that:
ObligSaSeCmeS 3Ware f ^ le9iSlatiVe resPonsibiljties and

the sector becomes active during this stage.
there is a reliance on activities that generally fall under the responsibilities
of promotion and communications.
Engagement:
the sector starts to fulfill its requirements and obligations.

the sector is active during this stage.
a greater amount of tools and activities related to enforcement is used
(i.e. monitoring tools).
the sector and REs begin to develop a relationship with FINTRAC.
Practitioner:
the focus is on maintaining a high level of compliance.

the sector is proactive and visibly interested in being compliant.
the compliance program looks to leverage the relationship with the sector
to support its mandate and the government's agenda.
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APPENDIX B- REGULATORY ENVIRONMENT
arasaastSASsarJtBS
depth varies greatly by province.
In addition, the Canadian Gaming Association (CGA) publicly represents Canada's

gaming industry and sets out the following objectives:
Serve as the industry's national information source by providing -cunt, o*mina
. Develop Industry wide programs and approaches for critical issues such as
responsible gaming.
Address legislative and regulatory issues affecting our members their employees
and customers.
Provide leadership on emerging issues
British Columbia
In British Columbia, the Gaming Policy and Enforcement Branch (GPEB) of the
Ministry of Housing and Social Development is responsible for policy and
legislation, standards, regulation, licensing, registration, distribution of gaming
proceeds and enforcement for all sectors of gaming.
The British Columbia Lottery Corporation (BCLC) conducts and manages table
games, making the Corporation responsible for all commercial and community
casino gaming, with the exception of the one at the Pacific National Exhibition
which runs for two weeks under an agricultural fair permit.
An MOU is in place with GPEB who conducts examinations on all BC casinos
annually in addition to completing a review of BCLC.
Alberta

The Alberta Gaming and Liquor Commission (AGLC) is primarily concerned with
licensing casinos and ensuring that the operators meet certain operational and
legislative requirements. The commission issues two types of licenses: one to the
casino operator and the other to the registered charity.
There are 8,000 charities in Alberta. Each year, 180 of them are permitted to
operate a charity gaming operation in each of the casinos for a period of not
more than 2 days. Volunteers within the charity run the casino cash cage and
each charity hires, on a private contract, an advisor to oversee the cage
operations. There are also four first nations casinos, with the first nations band
that runs each casino being the "charity" as well.
An MOU is in place with the AGLC who provides a brief PCMLTFA checklist for
each audit they conduct and they audit every casino at least once a year. This
checklist has been last amended in 2006 at the request of FINTRAC. The
checklists themselves are akin to a compliance questionnaire and the answers
are believed to be taken at face value (i.e., they do not validate the responses
provided by the casino compliance officer.)
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Saskatchewan
The Saskatchewan Liquor and Gaming Authority (SLGA) regulates the gaming
industry in Saskatchewan. It provides regulatory, educational and support
services to licensees and gaming suppliers.
For the five First Nations casinos in the province, the SLGA works in
collaboration with the Saskatchewan Indian Gaming Authority (SIGA).
The Saskatchewan Gaming Corporation (SGC) and SIGA operate the permanent
casinos in the province.
An MOU is in place with SLGA who only advise if they become aware of non
compliance incidental to their own reviews.
Manitoba
The Manitoba Gaming Control Commission (MGCC) regulates gaming activities

in the province. However, the MGCC is primarily responsible for gaming
registration and video lottery terminals, and has limited audit and oversight
powers with regard to Manitoba casinos.
The Manitoba Lotteries Corporation (MLC) is the crown corporation of the
provincial government answering to the Minister responsible for lotteries. It
operates and manages the two casino properties in Winnipeg: Club Regent
Casino and McPhillips Street Station Casino.
Manitoba also has two First Nations casinos that are run independently from the
MLC.
Ontario
The Alcohol and Gaming Commission of Ontario (AGCO) regulates the gaming
industry in Ontario. It establishes compliance models for Ontario casinos,
approves internal control manuals, conducts inspections and forensic
investigations and registers gaming floor supervisors and casino suppliers.
province's charity casinos and slots-at-racetracks, and also contracts out
"X management of the commercial casinos to private operators.
- v An MOU is in place with the AGCO. Although the AGCO has been reluctant with
granting full access to FINTRAC during past examinations, both parties have
agreed to further work together in order to improve the examination process.
Quebec
The Regie des alcohols, des courses et des jeux (RACJ) regulates the types of
games that can be played in Quebec casinos. Also it has the power to deliver,
suspend or revoke the licenses of casinos and charity casinos. Societe des
casinos du Quebec takes care of the hiring and the training of employees.
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Nova Scotia
The Nova Scotia Alcohol and Gaming Authority (NSAGA) is a licensing authority
for liquor, gaming and amusements, and also regulates liquor, gaming, and
amusements activity for which licenses have been issued.
A private operator runs the province's two casinos on behalf of the Nova Scotia
Gaming Corporation (NSGC).
An MOU is in place with the NSAGA. They have not conducted any examinations
and no examinations are planned.

Consumer Services, Office of the Attorney General, is responsible for charitable
gaming. The department has the responsibility to administer and regulate
charitable gaming as a result of the Lieutenant Governor in Council of the
province having issued an order pursuant to Section 207(b) of the Criminal Code
of Canada. That order is called the Lottery Schemes Order.
Gaming regulators in Canada are loosely represented by the Canadian Association of

Gaming Regulators (CAGRA), which is affiliated to the North American Gaming
Regulators Association (NAGRA) in the United States. The Canadian association is an
informal group with np established offices or physical structure. Their purpose is to bring
together agencies that regulate gaming activities and provide them a forum for the
mutual exchange of regulatory information and techniques, collecting and disseminating
regulatory and enforcement information, procedures, and experiences from all
jurisdictions and provide on-going gaming education and training for all members.
Members responsible for organizing meetings and conferences change from year to
year on a voluntary basis.
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Intelligence:
Likelihood of Non-Compliance for this segment has been determined to be: it'',;1
Group B: Casinos with slots and tables (without credit/front money

accounts)
Para. 16(l)(c) ATIA
Para. 16(l)(c) ATIA

CQ results and trends:
Awareness
Sensitivity/Vulnerability to ML/TF: The majority of funds entering and leaving casinos

are in cash form. Casinos in this group are geographically located in areas with high
volume of patrons such as Montreal, National Capital region, Vancouver, Windsor and
Niagara Falls. Although not very common, this group, on occasion will conduct business
with international patrons who request international wires and foreign exchange
transactions. Given the cash nature of casinos, it is a challenge to implement
sophisticated transaction monitoring for this segment as they deal with thousands of
cash transactions a day with unknown patrons. I
Diversity: REs within this group have hundreds of employees per location. As far as
number of locations are concerned REs in this group have a variety of location per RE
ratio. As an example of this, some REs have 1 location per RE and one RE has as many
as 29 locations for the one RE. Products and services include slots, table games, cash
transactions, foreign exchange, issuance of casino cheques and self service kiosks, wire
Para. 16(l)(c) ATIA
transfers, visa cash advances, stored value cards.
Entity Size: All REs in this segment are considered to be medium to large entities.
Exceptions are to be noted in Alberta as most REs are considered to be small.
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Intelligence
Volume

Para. 16(l)(c) ATIA
Group C: Racinos (Slots and Charity Casinos with slots only).
Para. 16(l)(c) ATIA

Awareness:
SensitivitvA/ulnerabilitv to ML/TF: The majority of funds entering and leaving casinos are
in cash form. Casinos in this group are spread out geographically across the country.
This segment does not conduct business internationally, as the clientele consists mostly
of local and tourists patrons which generally spend well under the reporting thresholds.
Given the anonymity of patrons playing slot machine and the various possibilities of
transactions at self-service kiosks, monitoring for this segment is limited to suspicious
activity observed by staff. Recent typologies have identified a risk of patrons loading slot
machines with small bills to cash out for larger bills or casino cheque.
Para. 16(l)(c) ATIA
Diversity: REs within this group have anywhere from 50 to 200 employees per location.
As far as number of locations are concerned, the location per RE ratio is generally one
for one. Products and services are limited to slots, cash transactions, foreign exchange,
Para. 16(l)(c) ATIA
issuance of casino cheques and self service kiosks.
Entity Size: All REs in this segment are considered to be small to medium entities.
17
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Intelligence:
Likelihood of Non-Compliance for this segment has been determined to be
Group D: Seasonal
Para. 16(l)(c) ATIA
Para. I6(l)(c) ATIA

Awareness
SensitivitvA/ulnerabilitv to ML/TF: 100 % of funds entering and leaving casinos in this

segment are in cash form. This segment does not conduct business internationally, as
clientele consists mostly of locals and tourists which are limited to small maximum bets.
Patrons never meet the reporting thresholds.
Diversity: REs within this group have fewer than 50 employees per location. Products
and services are usually limited to 1 or 2 products such as cash transactions and table
Para. I6(l)(c) ATIA
games.
Para. 16(l)(c) ATIA
Data Qualitv:
Entity Size: All REs in this segment are considered to be small entities.
Intelligence:
Likelihood of Non-Compliance for this segment has been determined to beGS *i!
Overall Likelihood of Non-Compliance for the Casino sector has been determined to
beSJM -f Formatted: Font: Bold
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APPENDIX D- RESEARCH SUPPORTING THE CONSEQUENCE

OF NON-COMPLIANCE
Consequence of Non-Compliance in regards to the detection and deterrence of Money

Laundering and Terrorist Financing has been determined by reviewing the following
criteria:
Products and services
Each casino conducts thousand of cash transactions every day as 95% of funds
entering and leaving casinos are in cash form. Once completed, these
transactions leave little or no paper trail. Casinos will only accept cheques and
bank drafts for selected high roller clients which represents a small portion of
their clients (less then 1%). Most casinos offer foreign exchange but this does not
usually represent a large portion of their business.
An overview of FINTRAC's case disclosures indicates that of the 210 ML/TF
disclosures made by FINTRAC in 2007/2008, 20.6% of the cases included
reports generated from transactions conducted at casinos. Furthermore, 25 of
these cases contained suspicious transactions conducted at casinos.
The number of services offered is considered to be small. The following is a list
of common services: Slot machine play, table games, foreign exchange, bill
breaking, Visa cash advances, front and credit accounts.
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Geographic Locations of REs:
The casinos sector in Canada is still considered to be a growing industry as the

number of casinos continues to increase. Casinos are generally located in areas
of high tourism and/or areas of large population. Ontario, British Columbia and
Alberta have the largest presence as far as number of locations is concerned.
Type of Business Relationships Maintained with Clients:
Other relevant factors:
Analysis on reporting STRs & LCTRs:
How does this sector as a whole mitigate the risks of Money Laundering and
Terrorist Financing?
Requlator
Regulator involvement in regards to Money Laundering and Terrorist Financing
varies from province to province. Most regulators have a primary mandate of
ensuring fair gaming in casinos. Some regulators do conduct high level
PCMLTFA compliance reviews.
Associations
The Canadian Gaming Association includes various members such as reporting
entities, casino operators, and gaming industry suppliers. Their mandate
includes items such as gaming industry issues and responsible gamine
RDIMS # 232276 20
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1+1 Financial Transactions and Centre d'analyse des operations

Reports Analysis Centre et declarations financieres

Mr.Bob Mackin Your File:

Dear Mr. Mackin:

234 Laurier Avenue West, 24th Floor Ottawa ON KIP 1H7

Money Laundering Risks

Macro Analysis & Research Unit

Doc# 382494 0001

Doc# 382494 0002

Specific Risk - Customers

Doc# 382494 0003

Specific Risk Products

Specific Risk - Banking Methods

Doc# 382494 0004

BCLC is responsible for managing and conducting gaming in BC and is defined as

ATIP Doc#382523 0001

PERSPECTIVES ON THE REPORT

ATIP Doc#382523 0002

RDIMS#9603 Last revised February 2008 Page 1 of 25

It does not include a person or entity that is a registered charity as defined in

Canada has a unique gambling policy structure. Unlike many international

This growth in casino revenue is the result of an increase in casino activities of

RDIMS #9603 Last revised February 2008 Page 2 of 25

April 26, 2007

Specific findings include:

1 Source: Canadian Gaming Association (www.canadiangaming.ca)

Government: Government casino refers to a government-operated

First Nations: First Nations, or Aboriginal casino, refers to casinos that

Commercial/Destination: These establishments, operated by private companies under

Community: Community casinos are strictly casino facilities operated by

Charity: Casinos operated by charitable and non-profit organizations

Seasonal: Casinos that are permitted to operate under subsection

RDIMS #9603 Last revised February 2008 Page 4 of 25

RDIMS #9603 Last revised February 2008 Page 5 of 25

The Manitoba Lotteries Corporation (MLC) is the crown corporation of the

Prince Edward Island

Gaming regulators in Canada are loosely represented by the Canadian Association of

RDIMS #9603 Last revised February 2008 Page 7 of 25

Non-Compliance Risk Assessment

In September 2004, FINTRAC sent Compliance Questionnaires to every casino in

In general, the responses indicated a high level of compliance in each region.

In fiscal 2004/05, FINTRAC signed a number of Memoranda of Understanding

In fiscal 2007/08, FINTRAC officers conducted compliance examinations on

Table 1: Risk Assessment by Province

RDIMS #9603 Last revised February 2008 Page 8 of 25

Money Laundering Risk Assessment

It is important to understand how casinos operate to assess the potential risk of

The number of opportunities available to a criminal to launder money on a

RDIMS #9603 Last revised February 2008 Page 9 of 25

There are a number of obstacles in place to discourage money laundering activity.

Casinos in Canada, unlike other jurisdictions, operate exclusively under the

police presence. Surveillance systems are in place that make it virtually

Approximately 2% of the casino patrons have established accounts with the

All major casinos share information on "high rollers", suspected "counters",

RDIMS #9603 Last revised February 2008 Page 12 of 25

Techniques Used to Launder Money

Placement or Smurfing Schemes of Lesser Amounts of Cash

In this scenario, an individual or group of individuals descend on a casino with

The individual purchases chips and participates in playing a minimum amount of

RDIMS #9603 Last revised February 2008 Page 13 of 25

Playing Against Another Player

Establishing Accounts at a Casino

RDIMS #9603 Last revised February 2008 Page 14 of 25

A variation of this theme is to request that your winnings be wire transferred to an