Royal Canadian Mounted Police Aided in Money Laundering 6/19/98

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- Kris Lotlikar

Montreal International Currency Center Inc., an undercover RCMP operation, inadvertently helped change over $120 million Canadian dollars in known or suspected drug money.  The operation was put into place in 1990 to catch money-launderers looking to exchange Canadian for US currency and bank drafts.  The operation investigated members of only two of the 25 suspected criminal organizations using the exchange.  On August 30, 1994, the sting ended, and police seized $16.5 million in cash and property from suspects, making 57 arrests.  The RCMP claimed it had broken one of the biggest money-laundering rings in Canada.

Due to inadequate funds and manpower, the police were not able to follow up on a majority of the transactions.  Constable Mike Cowley, a RCMP investigator, was very frustrated with the lack of resources.  He wrote a letter to his superior on Oct. 16, 1992, stating, "Without the necessary resources, it seems like our undercover officers are simply offering a money-laundering service for the drug traffickers."  Cowley also asked to be reassigned out of the operation.  The mob may have even known about the operation because a corrupt RCMP squad boss in Montreal.  Inspector Claude Savoie took $200,000 in bribes in exchange for leaking sensitive information.  Savio committed suicide in 1993 to avoid police questioning.  The RCMP estimates that the money that moved through the undercover exchange was enough to buy almost 5,000 kilograms of cocaine from Colombian drug cartels.  Once shipped back into Canada that could yield an estimated street value of $2 billion.

Many questions arise about this operation.  Was the operation legal? If so much money is getting past an exchange run by police, how much is getting past other exchanges?  How did the RCMP superior endorse this plan without needed funds?  Supreme Court Justice Mary Humphries is trying to get answers for some of these questions.  At the time of the so-called "reverse sting operation", it was illegal for anyone to possess proceeds from criminal activities, including officers conducting an investigation.  Undercover RCMP agents never made customers fill-out the proper forms and show identification required for exchanges for over $10,000 dollars.  On Sept. 24, 1992, one man exchanged $959,720 in Canadian cash without being identified.

In a case against a man accused of laundering money, the government denied a Supreme Court Justice order to open files on the operation.  Deputy RCMP Commissioner Terry Ryan and Jocelyne Bourgon each filed sworn affidavits stating that the documents about the police-run currency exchange are confidential.  The Ottawa Citizen reports that in January 1998, Madam Justice Humphries handed down a ruling that officers knowingly possessed proceeds of crime and failed to get suspects to properly report large currency transactions as required by law.  The operation made over $2 million in profits over the four years it was in existence.

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Issue #46, 6/19/98 McCaffrey Calls Legalization Movement "a devious fraud" -- Senator Biden Proposes Hearings | Republican Drug War Amendment to Tobacco Bill Passes Senate, but Legislation Will Likely Fizzle | Pain Patients Protest at Capitol, Blast DEA and Medical Boards | Report on the Heroin Maintenance Conference in New York | Money Laundering Sting Sparks International Incident | Royal Canadian Mounted Police Aided in Money Laundering | Canadian Centre on Substance Abuse Recommends Decriminalization | French Government Report: Marijuana Poses Less Danger Than Alcohol | District of Columbia Medical Marijuana Initiative Seeking Volunteers, Petition Deadline Coming Up | Editorial: A Marker on the Path to Sanity
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