Canada’s financial intelligence agency has imposed a record $126 million (Canadian $176.9 million) fine on cryptocurrency platform Cryptomus for several anti-money laundering breaches, citing failures to report thousands of suspicious transactions linked to child exploitation, ransomware, and sanctions evasion.
The Vancouver-based firm, registered federally as Xeltox Enterprises Ltd. and operating as Cryptomus, failed to file more than a thousand suspicious transaction reports and over 1,500 large-value crypto transaction reports in July 2024 alone, according to a statement released by Canada’s Financial Transactions and Reports Analysis Centre (FINTRAC) on Wednesday.
The penalty marks FINTRAC’s largest enforcement action to date. The $126 million fine is nearly nine times larger than the $14 million fine issued to KuCoin’s operator last month. Earlier in May, FINTRAC also fined Binance’s Canadian affiliate C$6 million for similar registration and reporting violations.
Both prior cases involved failures to register as money services businesses and report large or suspicious transactions.
Vulnerabilities in Canada’s virtual currency sector “significantly impair transparency and accountability and make the sector as a whole susceptible to exploitation by illicit actors,” FINTRAC noted in a separate statement.
FINTRAC said the crypto platform’s lapses concealed activity tied to child sexual abuse material, ransomware, fraud, and Iran-linked transfers, calling the company’s compliance controls, policies and procedures “incomplete and inadequate.”
The watchdog’s investigation identified 2,593 distinct breaches, including 1,068 failures to file suspicious transaction reports and 1,518 unreported large-value crypto transfers in a single month. The agency also cited violations of a Ministerial Directive requiring enhanced scrutiny of transactions linked to Iran, noting that 7,557 such transfers between July and December 2024 went unverified and unreported.
Investigators found further irregularities in the firm’s operations.
The Vancouver address listed for Xeltox Enterprises was a rented mailbox, with no evidence of Canadian staff or physical presence. FINTRAC added that communications during its compliance examination originated from Uzbekistan and Spain, because the crypto company “had no employees working in Canada.”
Decrypt reached out to the agency and the crypto platform for comment and will update this article should they respond.
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