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 identify over 1,000 transactions with suspected ties to criminal activities. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) disclosed the penalty against Xeltox Enterprises Ltd., also doing business as Cryptomus and formerly known as Certa Payments Ltd.
This fine of $176,960,190 sets a new record, surpassing the previous highest penalty of approximately $20 million imposed by FINTRAC on Peken Global Ltd, the operator of the cryptocurrency platform KuCoin, in September. The Director and CEO of FINTRAC, Sarah Paquet, emphasized the severe nature of the violations in the case of Cryptomus, which included connections to trafficking in child sexual abuse material, fraud, ransomware payments, and sanctions evasion.
FINTRAC identified 1,068 instances where Cryptomus failed to report transactions involving darknet markets and virtual currency wallets associated with criminal activities. Darknet markets are clandestine online platforms for illegal trade, while virtual currencies provide anonymity to users, making them attractive for unlawful activities.
In addition to the unreported suspicious transactions, Cryptomus also neglected to report 7,557 transactions originating from Iran between July 1 and Dec. 31, 2024, violating money laundering laws and ignoring ministerial directives related to financial transactions with Iran. These directives required Cryptomus to treat such transactions as high risk, verify identities, conduct due diligence, maintain transaction records, and report them to FINTRAC, all of which were neglected.
Moreover, FINTRAC discovered 1,518 transactions in July 2024 that met the reporting threshold for large virtual currency transfers. Cryptomus was found to have inadequate policies and procedures, leading to deficiencies in ongoing monitoring and “know-your-client” obligations. The Proceeds of Crime (Money Laundering) and Terrorist Financing Act mandates businesses, including financial institutions and real estate brokers, to maintain compliance regimes and report specific financial transactions to FINTRAC.
This penalty marks the latest enforcement action against Cryptomus, following its temporary ban by the B.C. Securities Commission from trading securities and market activities in May. In the fiscal year 2024-25, FINTRAC issued a record 23 violation notices, totaling over $25 million in penalties, marking the highest number of notices in a single year since its inception in 2008. FINTRAC has imposed over 150 penalties since gaining the authority to do so.