By CHAD SKELTON, VANCOUVER SUN November 4, 2010

http://www.vancouversun.com/entertainment/Lotteries+appeals+money+laundering+fine/3777814/story.html

VANCOUVER - B.C. Lotteries is appealing the nearly $700,000 fine it received earlier this year from the federal agency that tracks money laundering, arguing — among other things — that the public never should have been told it was facing such a penalty.

"Despite the statutory requirement prohibiting public disclosure of alleged violations ... the media nevertheless learned of the Notice of Violation and allegations of non-compliance against BCLC," it argues in documents filed last week in Federal Court.

Last June, BCLC received a notice from the Financial Transactions and Reports Analysis Centre of Canada (Fintrac) that it was being fined $695,750 for errors it made in more than 1,000 reports detailing transactions over $10,000 at B.C. casinos.

Under Fintrac's rules, violators are only supposed to be publicly identified once they have exhausted all their appeals.

However, news of the penalty leaked to the media over the summer and BCLC president Michael Graydon spoke to reporters, arguing that most of the violations concerned delays in filing reports or minor clerical errors.

Graydon also said BCLC had been "error-free" since June 1.

Fintrac spokesman Blaine Harvey said Thursday he believes news of the penalty was leaked by someone in B.C., not his staff.

"I'm sure it came from that end because ... we're a very secret organization here, we've got top-secret security clearances," he said. "That stuff doesn't go on here."

Harvey also noted that it was Graydon, not Fintrac, that gave reporters details of exactly why BCLC was being fined.

"We did not at that time issue any statement, notice or anything else with respect to the fact a fine had been levied against BCLC and to this day we still don't acknowledge that we did so," said Harvey. "The head of BCLC himself stood in front of the press and enumerated the various shortcomings we ostensibly had found. So he talked about it. I never talked about it."

In its appeal documents, BCLC argues Fintrac's fine was excessive because the lottery corporation was doing its best to correct the problems and some of the delays were due to transmission difficulties between BCLC and Fintrac's offices.

BCLC also argues Fintrac didn't provide it with sufficient information to address the violations and rejected some reports out of hand — for example, by finding that listing "retiree" or "unemployed" as an individual's occupation didn't comply with federal rules.

Fintrac has not filed its response to BCLC yet in Federal Court and Harvey refused to comment further since the matter is now before the courts.

In its appeal, BCLC asks that the case be heard in Toronto, not Vancouver.

In a written statement to The Vancouver Sun, BCLC denied it made that request to avoid local media scrutiny of the case, arguing it's because the lawyers it uses in such cases are based in Toronto.