Canada Imposes Record Fine on Crypto Firm for Money Laundering Violations

Canada's financial watchdog has handed down its largest penalty ever, slapping Vancouver-based cryptocurrency company Cryptomus with a stunning $126 million (C$177 million) fine. The penalty stems from widespread failures to report suspicious transactions that regulators believe were tied to serious criminal activities.

The Financial Transactions and Reports Analysis Centre of Canada issued the massive fine against Xeltox Enterprises Ltd., which operates under the Cryptomus brand. The company provides crypto trading, payment services, and peer-to-peer exchange platforms.

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FINTRAC found that the Cryptomus firm didn't file reports on over 1,000 transactions in July 2024 (over 30 per day) where they should have, based on a reasonable suspicion of money laundering or terrorist financing. In addition to this failure, the Cryptomus firm filed fewer than half of over 1,500 single-transaction exchanges for virtual currency (over $10,000) with clients throughout July 2024. This was not an issue of minor infractions, as the investigation identified the transactions as having potential ties to child pornography trafficking, fraud, ransomware payments, and sanctions evasion.

The Chief Executive Officer of FINTRAC stated that the seriousness of the offenses forced the agency to take extraordinary measures to enforce compliance. The fine is significantly larger than any other fines previously imposed by the agency. The fine imposed here is more than 9 times larger than the second-largest fine previously imposed by the agency.

Still, this isn't Cryptomus's first brush with authorities. The BC Securities Commission temporarily banned the company from trading securities last May, accusing it of potentially operating as an unrecognized exchange. That order, which suspended the firm from selling securities or derivatives, lasted until June.

The record fine supports Canada's greater agenda in addressing financial crimes. Finance Minister François-Philippe Champagne said that a new Financial Crimes Agency will be included in the budget later this month. This is because Canadians lost C$643 million to online fraud in 2024, which is almost three times the amount lost four years earlier. It is believed that only five to ten percent of fraud is reported to authorities.

The new agency will work alongside upcoming changes to the Bank Act, requiring financial institutions to take a more active role in spotting and stopping fraud. As virtual currency use grows, so do the risks of money laundering and terrorist financing, making cases like Cryptomus a wake-up call for the entire industry.