A significant fine of nearly $177 million has been imposed on a cryptocurrency exchange by Canada’s financial intelligence agency for various violations, including neglecting to report over 1,000 transactions suspected of criminal ties. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) disclosed the penalty against Xeltox Enterprises Ltd., operating under the names Cryptomus and formerly Certa Payments Ltd. This fine of $176,960,190 sets a new record, surpassing the previous highest penalty of around $20 million imposed on another cryptocurrency firm, KuCoin, in September.
The enforcement action was described by FINTRAC’s director and CEO, Sarah Paquet, as necessary due to violations related to activities such as trafficking in child sexual abuse material, fraud, ransomware payments, and sanctions evasion. Cryptomus failed to submit reports for 1,068 transactions involving darknet markets and virtual currency wallets associated with criminal activities. Darknet markets are platforms where illicit goods and services are traded anonymously, and virtual currencies provide anonymity to users, making them attractive to criminal elements.
In addition to not flagging suspicious transactions, Cryptomus neglected to report 7,557 transactions originating from Iran within a specified period. These transactions were classified as high risk due to ministerial directives related to financial dealings with Iran, requiring stringent verification procedures and reporting to FINTRAC, all of which were disregarded by Cryptomus.
FINTRAC also noted deficiencies in Cryptomus’ policies and procedures, particularly in ongoing monitoring and “know-your-client” obligations. The agency highlighted that businesses, including cryptocurrency exchanges, must adhere to strict regulations outlined in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, which include record-keeping, client identification, compliance regimes, and reporting of specific financial transactions.
Moreover, Cryptomus had faced prior sanctions, as the B.C. Securities Commission had temporarily barred the firm from engaging in securities trading and other market activities in May. In the fiscal year 2024-25, FINTRAC issued a record number of 23 violation notices to non-compliant businesses, resulting in penalties exceeding $25 million. Since acquiring legislative authority in 2008, FINTRAC has levied over 150 penalties to enforce anti-money laundering regulations.
This latest fine reflects the ongoing regulatory scrutiny within the cryptocurrency sector and the imperative for businesses to adhere to stringent compliance standards to combat illicit financial activities.
