Here’s an interesting story about how a Court dismissed a $24 million money laundering case because, in the Court’s view, the evidence did not prove that three unemployed siblings who funneled millions of dollars in cash through a money services business in Vancouver were laundering proceeds of crime. Even though one of the siblings suggested to the Court that he was evading taxes.
The prosecution’s theory was that the siblings were engaged in the illegal drug grow-op business and transported and sold illegal drugs they manufactured to the U.S. over a two year period.
Over $24 million in cash was funneled by the accused, and exchanged from U.S. to Canadian currency. One of the accused was convicted previously of operating an illegal drug operation.
The salient facts and findings of the case, R v. Nguyen et al, 2014 BCPC 0095, are as follows:
- Nam Hoang Nguyen (“Nam“) funelled $1.3 million cash through two money services business, they owned or controlled called Trans Vietnam Money Service in a two week period.
- Thi Ngoc Bich Nguyen (“Thi“) funneled $15 million cash through a Calgary based MSB over a two year period.
- Thu Thi Nguyen (“Thu“) funelled $7.2 million cash though the Calgary MSB over a two year period.
- The $24 million cash funneled through the Calgary MSB by the accused was inconsistent with, and not supported by employment.
- In 2003, Thi reported to tax authorities that her income was $21,000; Thu reported losses of $68,000; and Nam reported income of $19,000.
- Despite having no significant income, Thu owned a BMW and a house but couldn’t explain how that was possible.
- One of the accused, Thi, had $168,000 in her possession when arrested in $100 bills, (a sign of refining in money laundering law).
- Nam appears to have engaged in some level of tax evasion (a predicate office to the money laundering charge) and submitted that he exchanged at least $1.3 million cash without reporting it to tax authorities.
- Nam owned and operated the Trans Vietnam Money Service MSB and failed to file any reports to FINTRAC over any transactions that took place at that MSB.
- The Calgary based MSB that exchanged the $24 million cash failed to file any suspicious transaction reports with FINTRAC on either the Trans Vietnam Money Service or the three unemployed defendants.
- Nam argued, which the Court appears to have accepted, that the employees at the Calgary MSB which exchanged the $24 million cash without filing any suspicious reports, failed to alert him, as the owner of the Trans Vietnam Money Service MSB, of the reporting obligations to FINTRAC pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (“PCMLTFA“) and that his failures to report transactions with FINTRAC on behalf of Trans Vietnam Money Service was consistent with tax evasion, not money laundering. (the proceeds from tax evasion is proceeds of crime).
- Nam was previously convicted of manufacturing illegal drugs and that was immaterial for the Court to conclude that there was a connection between the criminal conduct (the illegal drug manufacturing in Vancouver) and the proceeds of crime from that illegal activity for the purposes of a money laundering conviction. (the proceeds from illegal drug manufacturing are proceeds of crime).
- (Although completely immaterial), Thu argued, which the Court appears to have accepted, that there was no evidence at trial establishing that MSBs in Canada were aware of the requirements of the PCMLTFA.
- There was evidence linking Thi and Thu to homes that were linked to the manufacture of illegal drugs.
- The Court held that although the number of transactions funneled through the Calgary MSB by the accused was “suspicious” and the accused had no sources of income, there was insufficient evidence to establish that $24 million cash was proceeds of crime because, inter alia, prosecutors did not know where the cash originated or where the cash went (there is no obligation in Canadian law for prosecutors to prove precisely where illicit cash originated nor to prove where it ended up. If such a legal obligation existed, it would be impossible to obtain convictions on any money laundering offence because it is impossible to prove where illicit cash first originates and even more impossible to prove where illicit cash ends up).
One of the surprising aspects of the case is the admission of tax evasion which is sufficient to convict but was not in this case.
The case involves stellar police investigation work on drug trafficking and money laundering and yet that too was unfortunately not credited in the judgment.
Also surprising is that, recollecting that one of the accused owned one of the MSBs, it appears permissible for a MSB to fail wholesale to comply with the PCMLTFA and avoid criminal conviction.