Canada’s financial intelligence agency has given out its largest-ever fine to a cryptocurrency exchange, saying numerous violations involving transactions connected to child sexual abuse material and sanctions evasions led to the “unprecedented” $177 million fine.
Xeltox Enterprises Ltd., which operates the cryptocurrency platform Cryptomus, was handed a $176,960,190 fine on Oct. 16 for non-compliance with the Proceeds of Crime and Terrorist Financing Act and associated regulations. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) said the B.C. company committed a total of six administrative violations.
“Given that numerous violations in this case were connected to trafficking in child sexual abuse material, fraud, ransomware payments and sanctions evasion, FINTRAC was compelled to take this unprecedented enforcement action,” said Sarah Paquet, director and CEO of FINTRAC, in an Oct. 22 release.
FINTRAC said Cryptomus failed to submit suspicious transaction reports when there were “reasonable grounds to suspect that transactions were related to a money laundering or terrorist activity financing offence.” FINTRAC said this happened on 1,068 separate occasions in July 2024.
The agency said Cryptomus also repeatedly failed to report receipts from clients in single transactions of over $10,000 in value, which happened on 1,518 separate occasions in July 2024.
In other violations, the company failed to comply with a ministerial directive, failed to develop and apply written compliance policies and procedures that are kept up to date and approved by a senior officer in the case of an entity, failed to assess and document the risk of a money laundering offence or a terrorist activity financing offence, and failed to “submit a notification of a change to the information provided in a prescribed application in the prescribed manner and with the prescribed information.”
FINTRAC noted that in some cases, there were “reasonable grounds to suspect” that some transactions were related to laundering proceeds connected to trafficking in child sexual abuse material, fraud, ransomware payments, and sanctions evasion. However, the agency said the company failed to submit suspicious transaction reports.
The financial intelligence agency said as Canada’s cryptocurrency sector continues expanding, the risks associated with money laundering and terrorist financing are also spreading.
“FINTRAC is reinforcing the importance of robust compliance frameworks to protect Canadians and safeguard the integrity of Canada’s financial system,” it said.
Cryptomus did not respond to The Epoch Times’ request for comment before publication time.
The $177 million fine broke the previous $20 million record for a fine imposed by FINTRAC, which was given to Peken Global Ltd, which operates the KuCoin crypto platform, on Sept. 25. While FINTRAC said the company failed to register as a foreign money services business, report suspicious transaction reports, and report large virtual currency transactions as required, KuCoin said it disagreed with the findings and had appealed what it called the “excessive and punitive” penalty to the Federal Court of Canada.
The First Nations Bank of Canada was fined more than $600,000 by FINTRAC for violations of rules around money laundering and terrorist activity financing on Sept. 22. The bank said FINTRAC found no evidence of criminal activity and that it had taken “meaningful and measurable steps” to enhance compliance measures since early 2023.
FINTRAC also imposed a $199,000 fine on the Canadian National Exhibition (CNE) Casino in July for failing to assess and document the risk of a money laundering or terrorist financing offence, and failing to institute and document the prescribed review. The casino has appealed the decision to the Federal Court.
FINTRAC said it issued a total of 23 non-compliance violation notices to various businesses in the 2024-2025 fiscal year, which was the largest number in one year in the agency’s history, totalling more than $25 million.
