Anti-money laundering authorities in Canada have revoked registrations of nearly three dozen cryptocurrency businesses following an investigation by the International Consortium of Investigative Journalists and The Toronto Star.
Last week, Canada’s Financial Transactions and Reports Analysis Centre removed 23 crypto firms from its registry of firms permitted to provide money services in the country. FINTRAC had earlier this month struck registrations of a dozen other crypto companies operating in the country.
The revocations mark a notable uptick in Canadian enforcement actions around money transmitters and an intensifying focus on crypto businesses in particular, according to experts and officials interviewed by the Star.
“This represents a significantly increased pace of action, and our government will maintain this momentum,” Canadian Finance Minister François-Philippe Champagne said in a statement. Champagne vowed to pursue new measures to address risks posed by virtual currency businesses, “which can be used to facilitate money laundering and fraud.”
The actions came after a Star investigation published in November found that dozens of crypto businesses in the Toronto area were not registered with FINTRAC to deal in virtual currencies. Many of these businesses specialize in converting cryptocurrency to physical cash. The Star story, part of ICIJ’s Coin Laundry investigation into dirty money in cryptocurrency, identified a single thoroughfare with 50 businesses advertising crypto services, most of which appeared to be operating unlawfully.
The Star found that two of these operations have used crypto wallets allegedly linked to Iran-backed terror groups.
Experts say that, while the FINTRAC announcement points to stepped-up enforcement, it remains unclear whether Canadian authorities will systematically tackle the country’s problems with illicit finance in cryptocurrency, which offers criminals a convenient avenue to sidestep traditional safeguards in place to track dirty money.
Denis Meunier, a former deputy director at FINTRAC, told the Star that the agency seems to be trying to send a message that, “FINTRAC is watching.” But he also pointed out that registrations of two businesses on the list had already expired in 2024, raising questions about why the agency is only moving now.
“I think they need to be quicker on the draw,” Meunier told the Star.
Joseph Iuso, executive director of the Canadian Money Services Business Association, told the Star that FINTRAC seems to be revoking registrations more often — and to publicize when it does.
“They’ve been criticized that they don’t have teeth, letting all these people register without checking. So I think they’re trying to show that, ‘Hey, we are checking and we do have teeth,’” Iuso said.
A spokesperson for FINTRAC told the Star the office will be taking additional action in the crypto industry in the coming days and weeks, but provided no details. FINTRAC “is prohibited from disclosing information on compliance actions that may be ongoing in relation to a specific business,” she said.
The Star’s reporting found that over more than a year, at least $120 million in crypto transactions moved through a single virtual wallet used by one crypto shop in the Toronto area. In two transactions, this wallet address received $430,000 worth of crypto from an account allegedly tied to Iran’s Islamic Revolutionary Guard Corps, which Canada has designated a terrorist organization, according to the report.
ICIJ and the Star’s reporting for The Coin Laundry also examined how courier services that exchange crypto for physical cash operate in Canada and other countries.
Last November, a reporter for the Star working undercover communicated with 001k, a cryptocurrency platform, over Telegram and sent the firm $2,000 in cryptocurrency in exchange for cash. Instead of asking for a customer name or ID, the service instructed the reporter to photograph the serial number on a five-dollar bill and then present the same banknote at the cash hand-off, in order to prove she was the same person who had provided the crypto. According to experts interviewed by ICIJ’s Canadian reporting partners, the Star, CBC and La Presse, this transaction likely violated Canadian anti-money laundering laws.
001k did not reply to ICIJ’s request for comment on that reporting.
Emma McIntosh and Sheila Wang contributed additional reporting.
