RCMP Dropped Chinese Money-Laundering Probe Due to Limited Impact, Resources

RCMP deputy commissioner Mark Flynn (L) and RCMP assistant commissioner Brigitte Gauvin speak to reporters after testifying at the Foreign Interference Commission in Ottawa on Oct. 3, 2024. The Canadian Press/ Patrick Doyle

An investigation into China-linked foreign interference and money laundering operation was dropped due to concerns it would have little impact, highlighting broader issues of resource limitations within law enforcement, a senior RCMP official says.

RCMP Deputy Commissioner Mark Flynn was made aware of a “money laundering network connected to organized crime and [People’s Republic of China foreign interference] activity,” according to a summary of his closed-door testimony at the Foreign Interference Commission released this week.

Flynn, who oversees federal policing, testified that he “queried what impact a successful financial crime investigation would have on the larger problem.”

“Because multiple backup networks could be used for money laundering activities, it was felt that a successful financial crime investigation would have no significant impact,” the summary stated.

“Deputy Commissioner Flynn ultimately refused the request because the proposed investigation was not sufficiently impactful to justify a higher prioritization.”

Flynn’s testimony about the incident was included in the “Resource Management” section of the summary, in which the inquiry examined the RCMP’s operational resources for foreign interference investigations. While the federal government had allocated approximately $49 million to the RCMP over three years in Budget 2023 to counter foreign interference, Flynn testified the demand for dedicated resources in this area is growing and already exceeds capacity.

RCMP Commissioner Mike Duheme also testified that 43 percent of the RCMP’s budget is allocated to providing contracted policing services for provinces, territories, and indigenous communities. As a result, federal budget cuts primarily affect other areas, including federal policing, which handles national security, organized crime, and foreign interference investigations.

Money-laundering operations in B.C. connected to drug operations were the subject of a years-long inquiry in the province that ended in October 2021. Expert testimonies at the inquiry described how Beijing-linked criminal organizations have been fuelling B.C.’s drug and money laundering crisis for years.

B.C. Premier David Eby has called for tougher laws to target money laundering.

Information Flow

Another obstacle for foreign interference investigations is the challenge of transforming intelligence into admissible evidence for criminal prosecutions, a process complicated by legal and procedural limitations within the Canadian judicial system, Flynn told the inquiry.

He testified that “this issue can limit the RCMP’s ability to investigate [foreign interference]-related activities, because the RCMP generally becomes aware of these activities from intelligence, both domestic and from international partners.”

Flynn added that when international partners share intelligence, it typically comes with caveats requiring the RCMP to protect sensitive information from disclosure, creating “a limit to the RCMP’s ability to action the received intelligence for criminal investigations,” according to the summary.

This has led to a shift in the RCMP’s approach, which traditionally focused on gathering evidence for prosecution. Now, in certain cases, the RCMP prioritizes disrupting foreign interference activities rather than building a case for more serious charges, such as those under the Security of Information Act, according to the summary.

“Deputy Commissioner Flynn spoke about how the RCMP no longer considers criminal prosecutions to be the ‘gold standard’ of law enforcement. Greater emphasis is now placed on harm reduction and public safety: the goal is to disrupt [foreign interference] related activities and prevent them from reoccurring,” the summary stated.

Flynn cited the RCMP’s investigation into alleged secret Chinese police stations operating in Toronto, Vancouver, and Montreal as an example of this shift in approach. These outposts were accused of facilitating the communist regime’s foreign interference, such as harassing and intimidating diaspora communities.

“The RCMP sent uniformed officers to neighbourhoods in which suspected PRC [overseas police stations] were operating,” stated the summary. “Flynn explained that this approach contrasted with historical RCMP practices. Previously, the RCMP would have sent plain clothes surveillance units and attempted to covertly collect information, potentially over a period of years.”

While the United States has charged individuals involved in operating a Chinese police station in New York City, no arrests have been made in connection to these stations in Canada.