Canada’s financial intelligence agency has hit the British Columbia Lottery Corporation with a $1.075-million penalty for failing to report suspicious transactions and monitor high-risk high-rollers — the first major suspected money-laundering case against the province’s casino arm since the Cullen Commission, whose more than 100 recommendations remain largely ignored by Premier David Eby’s government.

The case centers on BCLC’s failure to report suspicious cash transactions tied to a particular “high-risk” gambler, as well as its failure to maintain adequate compliance measures for such cases.

The provincial Crown corporation has appealed the decision in Federal Court, reportedly contending that Fintrac failed to consider whether the gambler’s “perceived uncooperativeness and inconsistencies arose from linguistic and cultural differences.”

This line of defense reflects a familiar refrain from the province’s casino administration: pushing back on audits and regulatory findings by pointing to cultural practices around gambling, especially large cash “buy-ins” by wealthy visitors from China.

The documents state that Fintrac examiners judged a patron to be evasive and at times dishonest, providing false or misleading information about their occupation and ownership of property.

Such gaps in vetting patrons echo a major vulnerability identified by the Cullen Commission.

But BCLC argues that in this case the perceived inconsistencies may have stemmed from language barriers and cultural context. The appeal reportedly specifies that the regulator neglected to take into account the patron’s English-language skills or the country from which they emigrated.

BCLC has a history of resisting anti-money-laundering enforcement. In 2010, it contested a $695,750 penalty, successfully securing its cancellation via a Federal Court consent order.

That judgment was followed by exponential increases in “Vancouver Model” laundering — which peaked with more than $1.2 billion in suspicious cash transactions in 2014, according to Commissioner Austin Cullen’s 2022 final report.

Fintrac’s July 17, 2025 decision cites three violations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. BCLC failed to submit two suspicious transaction reports despite “reasonable grounds to suspect” that a high-volume patron’s play was linked to money laundering or terrorist financing. Fintrac’s examiners noted gaps in the corporation’s enhanced due diligence reviews and identified multiple laundering indicators that were overlooked. The regulator also found that BCLC failed to keep its compliance policies up to date and approved by senior officers, and lacked documented procedures for identifying high-risk patrons.

The latest penalty comes against the backdrop of the Cullen Commission’s scathing 2022 report, which catalogued how billions in drug-linked cash flowed unchecked through B.C. casinos, real estate, and luxury markets. Cullen issued 101 recommendations, calling for sweeping reforms to break the province’s dependence on illicit capital. Yet more than three years later, only a handful of recommendations have been implemented by the Eby government. The most urgent — Cullen’s call for an independent Anti-Money Laundering Commissioner to oversee the provincial response — underscores the vulnerabilities exposed by BCLC’s latest alleged failing.

“The only way to reverse the state of affairs is to vest with one office the responsibility to support, oversee, and monitor the provincial response to money laundering,” Cullen wrote.

One particular set of data from the Commission’s final report illustrates how integral Chinese underground banks were to B.C. casino operations, and how easily gangsters accessed government-regulated financial sites. “In 2014 alone, British Columbia casinos accepted nearly $1.2 billion in cash transactions of $10,000 or more, including 1,881 individual cash buy-ins of $100,000 or more,” Cullen’s report said. That means that in 2014, almost 2,000 times, a gambler was allowed to walk into a B.C. government casino carrying at least $100,000 in cash and buy casino chips. In almost all cases these were gamblers who traveled from China or gangsters who facilitated them. “In addition to the extraordinary amounts, the cash used in many of these transactions exhibited well-known characteristics of cash derived from crime,” Cullen’s June 2022 report added.

Documents obtained by The Bureau in 2023 revealed that the RCMP’s internal response to the Commission — dubbed Project Neutralize — was not aimed at cracking down on laundering, but rather at blunting the Commission’s damaging findings. Records showed federal police sought to negate criticism that the force had failed to investigate the unprecedented surge of Chinese underground banking and cartel cash in B.C. casinos.

In a case reminiscent of the underground prison break of Sinaloa cartel boss “El Chapo” Guzmán, a high-profile Chinese national code-named Chino — who prosecutors say trained Hispanic drug traffickers to operate on U.S. soil, and who has been described as one of the main suppliers of fentanyl and a financial architect for both the Sinaloa and Jalisco Nueva Generación cartels — has suspiciously escaped Mexican custody through a hole in a wall while under house arrest. According to President Claudia Sheinbaum, he had been on the verge of extradition to the United States.

Indictment documents identify him as Zhi Dong Zhang, born in Beijing in 1987, and describe “Chino” as approximately five feet seven inches tall, weighing 175 pounds. He bridged the Chinese and Mexican wings of cartel fentanyl networks — and, significantly, is alleged to have served as a rare operative between Mexico’s two largest rival trafficking groups, the Sinaloa and Jalisco Nueva Generación cartels.

Demonstrating the financial reach that underscores what national-security experts have told The Bureau — that Chinese networks exert significant influence over the cartels by controlling both money laundering and chemical precursor supply — Zhang was tied to “approximately 150 companies and approximately 170 bank accounts,” according to U.S. investigations.

Zhang, known also as “Brother Wang” and “Pancho,” is charged in the Northern District of Georgia with a series of narcotics and financial crimes, including conspiracy to import cocaine and fentanyl, conspiracy to distribute narcotics, and money-laundering conspiracies and monetary transactions affecting interstate and foreign commerce. The government’s 30-page detention motion, filed on July 11, 2025, lays out his alleged command role in a transnational network spanning Mexico, the United States, and China — a filing that came just weeks before Mexico extradited 26 cartel prisoners on August 12.

In the early hours of July 11, Zhang reportedly evaded National Guard members stationed outside his residence and slipped through a tunnel connecting his home in the Lomas de Padierna neighborhood to a neighboring property. According to reporting, three outsiders helped him flee — a maneuver quickly compared to El Chapo’s 2015 escape from the Altiplano prison.

Sheinbaum confirmed three weeks ago that Zhang had been “about to be extradited to the United States” when he escaped — an unusually frank admission of the diplomatic stakes.

Zhang was detained in an elite Mexico City neighborhood in October 2024 by federal forces acting on a U.S. extradition request. Despite the gravity of the charges, a Mexican judge allowed him to trade prison for guarded house arrest. The Attorney General’s Office is now investigating the guards and judicial officials assigned to protect him, Sheinbaum said.

El Universal reported that the company responsible for installing the electronic bracelet that Zhang broke free of was not certified to provide such security and that his escape bore the hallmarks of corruption and collusion.

Mexican media have reported that Zhang is allegedly responsible for trafficking more than 1,000 kilograms of cocaine, 1,800 kilograms of fentanyl, and over 600 kilograms of methamphetamine, generating an estimated $150 million annually in profits, with operations spanning the United States, Central and South America, Europe, China, and Japan.

According to U.S. court filings, Zhang directed the preparation of cocaine and fentanyl shipments in Mexico, arranged smuggling into the United States by couriers using vehicles and aircraft, and managed logistics once the drugs arrived. He also oversaw underground “stash house” cash brokerages where cartel proceeds were collected, counted, and deposited into major U.S. banks, including JPMorgan, Wells Fargo, Bank of America, and Chase. Distribution points, prosecutors allege, stretched from Georgia and California to Illinois, Ohio, Texas, North Carolina, New York, and Michigan.

In the government’s telling, Zhang functioned not only as a financier but as a corporate manager — orchestrating narcotics supply and laundering networks across multiple continents, while directing associates in Atlanta to train Hispanic couriers to make structured cash deposits into U.S. financial institutions.

A raid on one California stash house revealed “approximately 150 companies and approximately 170 bank accounts that were connected to Zhang’s organization through wire transfer records and corporate registration information,” indictment filings state, leading detectives to “approximately USD $20 million in proceeds that were deposited into bank accounts controlled by Zhang’s organization in 2020 and 2021.”

Through the interception of encrypted communications on DingTalk, WeChat, and Signal, and admissions by a cooperating conspirator, investigators learned that Zhang served as the critical bridge between two arms of his operation: a Mexican wing responsible for collecting drug proceeds directly from traffickers, and a Chinese wing tasked with laundering the money through bulk cash smuggling, bank deposits, and wire transfers. The evidence portrays Zhang in a command-and-control role, linking fentanyl suppliers in mainland China to the cartel logistics network in Mexico. U.S. national-security experts have separately warned that China’s chemical sector — including operators with Chinese Communist Party ties — has been subsidized to produce and export precursor chemicals critical to fentanyl production, providing the geopolitical backdrop to Zhang’s activities.

Experts such as former DEA Special Operations Division investigator Donald Im told The Bureau that operators at Zhang’s level often maintain significant ties to the Chinese Communist Party — both through underground banking and money-laundering networks, and through privileged access to state-regulated precursor chemical supplies.

In an unrelated post today, responding to a New York Times investigation on Chinese election-interference networks in New York City, former CIA analyst Peter Mattis asserted that the CCP “is comfortable with criminality” and linked its operations to drug-trafficking cases. “We also have the CCP’s export of fentanyl precursors as a matter of national policy via VAT rebates,” Mattis wrote, citing U.S. congressional investigations and testimony.

California Stash Houses Reveal Cartel Cash in U.S. Banks

In March 2021, detectives raided the residence of a cooperating conspirator in Rowland Heights, California, uncovering a stunning cache of evidence that laid bare the financial backbone of Zhang’s network. Inside, authorities found hundreds of documents tied to Zhang’s organization: folders containing names, aliases, IDs, passports, corporate registrations, bank records, SIM cards, and post office keys. Many paired photographs with bank accounts investigators later confirmed as belonging to Zhang’s associates. The cache revealed at least 25 accounts used to launder cartel proceeds, anchoring the probe that traced drug money from Mexican traffickers through Zhang’s Chinese laundering arm and into the U.S. banking system.

The indictment details Zhang’s financial footprint. On July 20, 2020, $35,000 and $20,000 were deposited into JPMorgan Chase accounts and $80,000 into a Wells Fargo account, all linked to Zhang’s front company Mnemosyne International Trading, Inc.; on December 2–3, 2020, additional deposits included $35,000 into Bank of America, $65,000 into another Chase account, and $50,000 each into two more Chase accounts. Federal forfeiture schedules list seizures of more than $431,000 from a Citibank account, $145,000 from First Citizens Bank, $52,000 from Wells Fargo, and additional tens of thousands from Bank of America and Chase accounts — all alleged narcotics proceeds.

In August and September 2021, acting at Zhang’s direction, a cooperating conspirator leased five more stash houses and two vehicles across California — in Los Angeles, Rowland Heights, Diamond Bar, Alhambra, and Monterey Park — for drug and laundering operations, later training an associate known only as “Willy” to manage them.

Court records also detail surveillance of a July 2020 Atlanta operation in which $100,000 in cartel cash was delivered to one of Zhang’s associates, Jesus Miranda Cota. Authorities observed Cota make structured deposits: $35,000 into a Chase account, $80,000 into Wells Fargo, and another $20,000 into the Chase account.

In January 2022, investigators say Zhang expanded further. While in Hermosillo, Mexico, he recruited another conspirator, “CC-2,” introduced by Willy. In intercepted messages, Zhang and CC-2 discussed shipments into Atlanta, including one initially set at 15 kilograms of cocaine and one kilogram of fentanyl, later adjusted to 10 kilograms of cocaine and one kilogram of fentanyl. In these encrypted exchanges, Zhang used coded language, referring to fentanyl as “coffee” and cocaine as “food.”

Zhang is now considered a high-priority fugitive from U.S. justice. Interpol has reportedly issued a red notice.