Charity casino at CNE fined $199K for violating federal anti-money laundering and terrorism finance law

The charity casino at the Canadian National Exhibition, the country’s largest summer fair, has been hit with close to $200,000 in fines for violating federal anti-money laundering and terrorism financing laws.

The CNE Casino runs in tandem with the CNE, which opened Friday, but it is not all fun and games at Toronto’s Exhibition Place — the casino is denying and appealing the violations and fines imposed by the Financial Transactions and Reports Analysis Centre of Canada (Fintrac), the federal money laundering watchdog.

The casino is a temporary, not-for-profit casino that has been a part of the sprawling CNE since 1991 — alongside the amusement park rides, exotic food stands, live music and agricultural displays.

After an examination of the casino’s compliance with Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act in March, Fintrac alleged two violations with a maximum administrative penalty of $100,000 for each, according to the casino’s notice of appeal filed in Federal Court.

The CNE Casino was found to have violated the proceeds of crime laws by having inadequate risk assessment procedures and failing to conduct a bi-annual effectiveness review of its compliance program, according to the court filing.

The casino defended their operation but on July 14, the week before the casino opened to the public for the summer, Fintrac sent notice confirming a decision on both violations, but knocking $1,000 off the penalties.

“CNE Casino denies that it has committed any violation of the (proceeds of crime act) or its Regulations,” the casino says in its appeal notice. It also complains of being given the maximum financial penalty.

“CNE Casino hereby appeals both findings and the resulting monetary penalties.”

Gary Bostock, Director of the CNE Casino, said the casino continues in full operation during the fair and while the case is under appeal.

“There has never been any allegation of criminal activity at the CNE Casino in this process. We are in full compliance with all regulations and are committed to operating a safe, legal, and efficient business that benefits our charitable Foundation,” Bostock told National Post.

Lori Blair, communications advisor with Fintrac, declined to provide copies of the violation notices that were served on the casino. She also said she wouldn’t comment on the case because it is before the Federal Court.

The casino’s appeal suggests one violation was over how staff report “high-risk transactions” from betters at casino tables. The other was because the casino “admitted to not conducting a two-year effectiveness review.”

In its appeal, the casino complains that the reasons for the Fintrac directors’s decisions “are so truncated that they do not permit CNE Casino or this Court to understand the basis of her decision” and “do not meet the minimal functional requirements expected from decision makers.”

“The ‘reasons’ they purport to set out are opaque to the point of unintelligibility,” the casino’s appeal notice says.

“The Director completely fails to explain which procedures have not been ‘kept up to date’ and which regulatory requirements are missing. Her complete failure to bridge that logical gap leaves CNE Casino in the dark with respect to what it must do to fulfill its regulatory obligations.”

The casino also claims Fintrac seems to have ignored its response to the violation notices.

“CNE Casino offered a lengthy description and detailed evidence of the policies and procedures that help it effectively identify, document, and mitigate potential risks. The Director addressed none of it,” the casino’s court filing says.

The casino declared on its Fintrac questionnaire that it had not done a two-year review, but argues that because of its seasonal business the casino conducts its review every year: “These effectiveness reviews may not take on the form Fintrac prefers, but the regulatory obligation is one of substance, not of form.”

The casino calls the reduction of just $500 each on two fines of $100,000 a “nominal” amount.

Fintrac told the casino, according to court documents, the federal fines are “necessary to encourage compliance” and “appropriately reflect the harm caused, take into account CNE Casino’s compliance history and aims to promote adherence to the Act.”

Fintrac described the casino as a well-resourced entity that could afford to pay the penalties but gave a small reduction because the casino had fixed both violations.

The casino said these are its first Fintrac violations and the watchdog agency should stick to its practice of reducing first-time penalties by two-thirds.

The CNE Casino is licensed by the Alcohol and Gaming Commission of Ontario, but unlike regular casinos, its proceeds go to a charitable foundation, and its operational allowances are narrower: it can only offer table games with the maximum bet capped at $300.

Known as The Ex, the CNE attracts huge crowds, about 1.5 million last summer, and is billed as the largest community event in Canada.

The CNE Casino opened its season about a month before the CNE and ends when the fair wraps up, at the end of business on Labour Day.

The CNE Casino features a variety of betting table games including Blackjack, No Commission Mini Baccarat, Roulette, and a Texas Hold’Em Poker room. Its seasonal opening days has fluctuated from a low of 18 to a high of 50, according to court documents.

National Post, with additional reporting by Christopher Nardi

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