Canadian authorities have revoked the registrations of nearly three dozen cryptocurrency businesses following an investigation by the International Consortium of Investigative Journalists and The Toronto Star.
Crackdown on Crypto Firms
Last week, Canada’s Financial Transactions and Reports Analysis Centre (FINTRAC) removed 23 crypto firms from its registry. Earlier this month, FINTRAC also struck the registrations of another 12 crypto companies operating in the country.
The actions follow a Star investigation published in November that revealed dozens of crypto businesses in the Toronto area were not registered with FINTRAC. Many of these businesses specialize in converting cryptocurrency to physical cash.
The investigation, part of ICIJ’s “Coin Laundry” investigation into dirty money in cryptocurrency, identified a single street with 50 businesses advertising crypto services, most of which appeared to be operating unlawfully.
The Star also found that two of these operations have used crypto wallets allegedly linked to Iran-backed terror groups.
Increased Enforcement, Questions Remain
Experts suggest the revocations mark an increase in Canadian enforcement actions related to money transmitters and a greater focus on crypto businesses. Canadian Finance Minister François-Philippe Champagne stated, “This represents a significantly increased pace of action, and our government will maintain this momentum,” and vowed to pursue new measures to address risks posed by virtual currency businesses.
A former deputy director at FINTRAC, Denis Meunier, noted that the agency appears to be signaling that “FINTRAC is watching,” but also questioned the timing of some revocations, as registrations for two businesses had already expired in 2024.
Joseph Iuso, executive director of the Canadian Money Services Business Association, suggested FINTRAC is now more frequently revoking registrations and publicizing those actions, responding to past criticism that it lacked enforcement power.
FINTRAC has indicated it will be taking additional action in the crypto industry in the coming days and weeks, but has not provided specifics.
Reporting by The Star revealed that at least $120 million in crypto transactions moved through a single virtual wallet used by one crypto shop in the Toronto area over a year. Two transactions within that total involved $430,000 worth of crypto from an account allegedly tied to Iran’s Islamic Revolutionary Guard Corps, an organization Canada has designated as terrorist.
ICIJ and The Star’s “Coin Laundry” investigation also examined how courier services facilitate the exchange of crypto for physical cash in Canada and other countries.
Last November, a Star reporter working undercover exchanged $2,000 in cryptocurrency for cash with 001k, a cryptocurrency platform, without providing a name or ID. The service requested a photograph of a five-dollar bill’s serial number to verify the reporter’s identity, a practice experts believe likely violated Canadian anti-money laundering laws.
001k did not respond to a request for comment.
Frequently Asked Questions
What prompted the recent crackdown on crypto firms in Canada?
The crackdown followed an investigation by the International Consortium of Investigative Journalists and The Toronto Star, which revealed numerous unregistered crypto businesses operating in Canada and potential links to illicit financial activity.
How many crypto firms have had their registrations revoked by FINTRAC?
FINTRAC revoked the registrations of 23 crypto firms last week, and another 12 earlier this month, bringing the total to 35 in a short period.
What concerns remain regarding illicit finance in cryptocurrency in Canada?
Experts say 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.
How will Canada balance innovation in the cryptocurrency sector with the need to prevent money laundering and other financial crimes?
