The $176,960,190 surpasses the previous record – roughly $20 million – for a fine imposed by Fintrac. That fine was imposed in September on Peken Global Ltd, the operator of another cryptocurrency company, KuCoin.
“Given that numerous violations in this case were related to trafficking in child sexual abuse material, fraud, ransomware payments and sanctions evasion, Fintrac was compelled to take this unprecedented enforcement action,” director and CEO Sarah Paquet said in a statement about the Cryptomus fine.
Thousands of crypto transactions not reported
In a statement, the company said it is cooperating with the regulator and taking the necessary measures in accordance with their decision.
The agency found 1,068 cases in which Cryptomus failed to file reports for July 2024 transactions involving known darknet markets and virtual currency wallets linked to the criminal activity Paquet described. Darknet markets are online and often anonymous platforms where illegal goods and services are sold. Virtual currencies also mask the identity of their holder, making both these coins and the darknet markets a haven for criminal activity.
Fintrac said that in addition to violating money laundering laws when it failed to flag suspicious transactions, Cryptomus also committed an offense when it failed to report 7,557 transactions originating in Iran between July 1 and December 31, 2024. Due to ministerial directives related to financial transactions related to the Islamic Republic of Iran, Cryptomus was supposed to treat these transactions as high risk.
It was also required to verify the identity of the sender(s)/beneficiary(s), conduct due diligence, track the transactions and report them to Fintrac, but the agency said none of these obligations had been met. Additionally, in July 2024, Fintrac found 1,518 transactions that met the $10,000 threshold at which companies must report a large transfer of virtual currency. Fintrac said these cases were not reported by Cryptomus, which also had “incomplete and inadequate policies and procedures” that caused shortcomings in the way the company handled ongoing monitoring and know-your-customer obligations.
The best crypto platforms and apps
We’ve ranked the best crypto exchanges in Canada.
Case underlines the increasing scrutiny of crypto compliance
Adam Garetson, a partner at Gowling WLG who heads the digital assets group, said the size of the fine appears to reflect both the seriousness of the allegations and the number of times the rules have apparently been broken. “The allegations of non-compliance were enormous, just from a volume perspective. They are also allegations of evidence showing direct links to criminal activity, and flows of funds to sanctioned countries that occurred on an apparent regular basis,” he said. “So these are quite egregious allegations in terms of non-compliant activities.”
He said the allegations are in stark contrast to what he sees generally in the Canadian crypto trading market, where operators adhere to anti-money laundering rules and Canadian securities regulations. The size of the fine against Cryptomus comes as both Canadian and international regulators see increased support for higher fines and sanctions to tackle illicit financing, he said.
Whether the regulator will be able to collect the fines is another question, as the company appears to have limited ties to Canada beyond its registration, and apparently has no employees based in the country. Garetson said there is at least increasing cooperation among regulators globally on anti-money laundering to increase the chances of recovery.
Article continues below advertisement
X
Paquet said in her statement that Fintrac is committed to working with both domestic partners and international allies to protect the safety of Canadians.
Record year for Fintrac enforcement actions
Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, companies ranging from financial institutions to real estate agents and casinos must maintain certain records, identify customers, maintain a compliance regime and report financial transactions that meet specific criteria to Fintrac. Wednesday’s fine is the latest reprimand Cryptomus has received. The BC Securities Commission temporarily banned the company from securities trading and other market activities in May.
In 2024-2025, Fintrac sent 23 violation notices to companies that did not comply with the rules. It was the largest number of notices in one year in its history and amounted to more than $25 million in fines. Fintrac has imposed more than 150 fines since it was given the legislative authority to do so in 2008.
Receive free financial tips, news and advice from MoneySense in your inbox.
#Cryptocurrency #exchange #Cryptomus #hit #record #million #fine #Fintrac #MoneySense