Mystery shoppers sent to four Ontario casinos to assess money-laundering practices were able to make away with a number of cheques totalling over $35,000 despite limited play and no proof of winnings, Wednesday’s auditor general report finds.
The mystery shoppers were independently hired by the Auditor General (AG) as part of an audit of Ontario’s Lottery and Gaming Corporation (OLG) conducted between January and September 2022.
“The purpose of the mystery shopper assignment was to test whether the casinos verified the mystery shoppers’ play and casino wins before issuing cheques of $3,000 or more,” the report reads.
The shoppers entered the casinos with amounts ranging from $5,000 to $11,000 in cash, the report says, played at table games and slots for 10 to 15 minutes, and then proceeded to be cashed out with cheques.
At one casino on two separate occasions, the shoppers were able to obtain two cheques worth $4,900 after entering with $5,000 cash, and a cheque worth $10,600 after entering with $11,000 cash.
The auditor says, although staff attempted to verify whether the mystery shopper had played at the casino, they failed to verify whether the funds were coming from legitimate wins.
“Similarly, the shoppers obtained cheques of $10,500 after entering with $10,600 cash, and $10,750 after entering with $11,000 cash at the other casino on two separate occasions,” the report found.
According to the AG, the shoppers were able to leave these casinos with almost 98 per cent of the funds they had originally brought in as cash – in total, $36,700.
“Now these funds could be considered ‘laundered’ because the cheque could be represented as casino winnings as the source of funds for deposit at a bank,” it said.
The shoppers were appropriately denied cheques at the other two casinos and left with only cash.
In response to its findings, the AG issued a number of recommendations to the OLG to reduce the risk of money-laundering, including obtaining proof of source of funds at buy-in for transactions of $10,000 or more, and issuing casino cheques only when the funds are verified as a casino win.
More broadly, the AG says the OLG needs to revamp its money-laundering practices, with an emphasis on proactive enforcement.
The OLG says it “agrees with the need to continuously address money-laundering risks in land-based gaming sites.”
“We will work with casino operators to evaluate additional cheque issuance restrictions,” an OLG statement included in the AG report said.
The corporation also says it’s expanding its current requirements to include a requirement to obtain a source of funds for all cash buy-ins above $10,000, consistent with federal requirements that are coming into force in June 2023.
