Public Prosecution Service of Canada Suddenly Stays Major Money Laundering Case Nearing Trial

On November 28, CBC reported that during the week of November 19, a major money laundering case that the Public Prosecution Service of Canada (PPSC) was scheduled to take to trial in January 2019 was stayed (i.e., discontinued) at PPSC’s request.  A press release by the Royal Canadian Mounted Police (RCMP) briefly stated that the charges “were stayed for several reasons that materialized during the course of the file; the nature of which will not be discussed in any detail given operational sensitivities.”

Criminal charges in the case had been laid in 2017 against three defendants: Silver International Investments Ltd., a Richmond, British Columbia-based money-transfer business; Caixuan Qin, the director of Silver; and a second individual, Jain Jun Zhu.  All three defendants were charged with five counts that included laundering proceeds of a crime, possession of property obtained by crime, and failing to ascertain the identity of a client.  Government documents alleged

that organized criminals used Silver as an illegal bank to wash drug money. According to the allegations, a network of “private lenders” in Richmond lent cash from Silver to VIP gamblers recruited from China. These high-rollers visited B.C. for gambling junkets, according to these allegations, and received hockey bags full of cash.

Officials allege these loans allowed wealthy gamblers to get money in Canada, bypassing China’s tight-capital export controls, and pay back the loan through underground banks in China. The VIPs were able to buy betting chips with street-cash $20 bills, mostly at Richmond’s River Rock Casino, and later cash out with $100 bills more suitable for investment in B.C., an audit by B.C.’s gaming enforcement policy branch alleges.

The stay of the case is clearly a setback for Canadian law enforcement’s efforts against money laundering, particularly “Operation E-Pirate,” the investigation that the RCMP had been conducting since 2015 into money laundering in British Columbia.  There is no doubt that money laundering through casinos in British Columbia’s Lower Mainland (i.e., the area in and around Vancouver) has reached grave proportions over multiple years.  A 2018 report, which British Columbia Attorney General David Eby commissioned, stated that for many years, “certain Lower Mainland casinos unwittingly served as launderomats for the proceeds of organized crime.”

The stay does not appear to have imperiled Operation E-Pirate overall.  A statement by Federal Minister of Border Security and Organized Crime Reduction Bill Blair that “[w]e cannot comment further on an ongoing investigation” may indicate that E-Pirate will continue.  On the other hand, the RCMP reportedly stated that it “is reviewing the file to understand ‘its activities which contributed to this stay,” to incorporate relevant lessons and prevent this from happening in the future.”  That statement clearly suggests that the PPSC found it necessary to drop the Silver/Qin/Zhu case because of critical flaws in investigative procedures.  If that proves to be the case, as the United Kingdom Serious Fraud Office found in 2012 when it found it necessary to drop a case fatally flawed by a seriously mishandled investigation, it may take some time to repair the damage to the PPSC’s and RCMP’s reputations.