CASH A BIG PROBLEM FOR DRUG DEALERS

Police say it's not unusual to find large sums of money when they
conduct drug raids

Ten years ago, it was unusual for police to find $100,000 cash in a
drug raid. Now it's routine, said Vancouver RCMP Inspector George
Pemberton of the Integrated Proceeds of Crime section.

"Last year, Vancouver police did a search of a marijuana broker's
house and seized $1 million cash," he explained. "We're making a lot
more cash seizures."

Pemberton cites "B.C. Bud" -- high-grade marijuana typically grown
indoors -- for the significant growth in the amount of illicit cash
being generated.

The biggest problem large amounts of cash create for drug dealers is
how to get rid of it without being detected.

The RCMP have said the raids on the legislature offices of two
government aides in Victoria stemmed from a 20-month criminal
investigation involving drug trafficking, organized crime and
money-laundering.

There is significantly more money being laundered in B.C. than there
was 10 years ago, mainly driven by the cash-based marijuana growing
industry, which is booming across Canada, Pemberton said.

A prime example was the marijuana growing-operation bust in Barrie,
Ont., last weekend, when police searched a former Molson brewery and
found 30,000 marijuana plants -- the largest bust of its kind in Canada.

The crop was worth an estimated $30 million. The annual gross was
pegged at $100 million. Police suspect organized crime set up the
sophisticated, industrial-style grow-op.

"It's an exceedingly lucrative business," Inspector Mike Ryan of the
Organized Crime Agency of B.C. said of the domestic marijuana business.

"One crop in an ordinary residence will net $80,000," he explained. "A
crop in a walk-in closet could be worth $10,000."

The average indoor growing operation produces three crops a year.
Police estimate there are up to 10,000 marijuana growing operations in
the province.

Forbes, the influential U.S. business magazine, did a cover story last year
titled "Inside Dope: Canada's dirty, well-lit marijuana trade is rich,
expanding ... and unstoppable." It now is Canada's most valuable
agricultural product, the magazine said.

"With prices reaching $2,700 a pound wholesale, the trade takes in
somewhere between $4 billion (US) nationwide and $7 billion just in
the province of British Columbia, depending on which side of the law
you believe," the magazine said.

The figures may be high, considering that police estimate the amount
of money being laundered in Canada each year is between $5 billion and
$15 billion.

"It's impossible to measure," Ryan said, pointing out that money
launderers don't report their illegal activities.

The biggest export market for B.C. marijuana still remains the U.S.,
where smugglers routinely trade "green for white" -- B.C.-grown
marijuana for cocaine. The cocaine is smuggled back into B.C., where
it is often converted to highly addictive crack cocaine.

Some of the marijuana is being smuggled into the U.S. using co-opted
truckers, who are seduced by the lure of large, tax-free cash
payments. Others smuggle pot in backpacks while crossing remote
sections of the Canada-U.S. border on foot.

On Monday, a B.C. truck loaded with potatoes and bound for Toronto was
stopped at a weigh station east of Winnipeg. Police found about 37
kilograms (81.5 pounds) of cocaine and approximately 100 kilograms
(220 pounds) of marijuana. Two men were charged with trafficking:
Gurprit Singh Grewal, 23, of Abbotsford, and Onkar Singh Bains, 29, of
Surrey.

Organized crime uses sophisticated techniques to hide the illegal
source of funds, making it difficult for police to detect.

Profits are invested in real estate, business ventures, stocks and
off-shore banks using shell companies in foreign countries to
facilitate wire transfers of funds to make the money appear legitimate.

In 1989, the government introduced proceeds of crime legislature,
which allowed police to go after criminal assets rather than just the
drugs -- hitting organized crime where it hurts most.

In June 2000, the government brought in new reporting requirements for
suspicious transactions, especially those involving amounts of $10,000
or more, to fight global money laundering and the financing of
terrorist activities.

The new legislation resulted in the creation of Canada's financial
intelligence agency, the Financial Transactions and Reports Analysis
Centre of Canada (FINTRAC), which collects, analyses and discloses
information on suspected money laundering and terrorist financing activities.

FINTRAC also receives reports on the cross-border movement of large
amounts of currency or monetary instruments, analyses the information
and provides tips to police that could lead to the investigation and
prosecution of money laundering offences and terrorist activity.

The agency also tips the Canadian Security Intelligence Service about
financial intelligence relevant to threats to the security of Canada.

In its first partial year of operation, FINTRAC received 3,700
reports. By March last year, the number of reports had jumped to 2.2
million, with 99 per cent filed electronically, using computer
software supplied by the agency.

In its annual report for the 2002-2003 financial year, FINTRAC made
103 disclosures of financial intelligence to police and national
security agencies, including:

- - 78 disclosures related to suspected money laundering;

- - 24 disclosures related to suspected terrorist activity financing and
other threats to the security of Canada;

- - one disclosure related to both suspected money laundering and
suspected terrorist financing or threats to the security of Canada.

The total value of these suspicious financial transactions was about
$460 million.

"Money laundering and terrorist financing are complex activities,"
said FINTRAC director Horst Intscher in the agency's recent annual
report.

"Their powerful corrosive and corruptive potential has led many
countries to implement strong measures to detect these transactions,
as a first step in mounting a deterrent response to the individuals
and groups involved in such activities," he wrote.

"Combating money laundering and terrorist financing aims at disrupting
the groups engaged in these activities and seeks the forfeiture of the
proceeds of their illicit activity. Achieving these objectives
requires the sustained active engagement and strong collaborative
effort of a range of actors, both public sector and private sector,
including financial institutions and intermediaries, police and
security agencies, prosecutors, and the courts."

The new FINTRAC regime caused some currency exchanges to close down.
Previously, currency exchanges had been unregulated and were used by
criminals to launder cash.

"I think the new [regulatory] regime is really good for the industry,"
said Bernie Beck, chief compliance officer for Custom House Foreign
Exchange, which has offices in Vancouver and five countries.