OTTAWA — Canada’s financial intelligence agency has imposed its largest penalty ever on a Vancouver cryptocurrency company for failing to report suspicious financial transactions suspected of being connected to laundering money from trafficking in child sexual abuse material, fraud, ransomware payments and evading sanctions.
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) said Wednesday that Xeltox Enterprises Ltd., which operates as Cryptomus, has been fined $176,960,190 for a range of administrative violations, including failing to report transactions of more than $10,000 in virtual currency on 1,518 occasions in July 2024.
The fine is not only the largest ever levied by FINTRAC, but more than nine times as much as the second largest.
According to a news released, FINTRAC also found that Xeltox’s violations included: failing to submit suspicious transactions reports on 1,068 occasions in July, 2024 where there were “reasonable grounds” to suspect that transactions were related to money-laundering or terrorist activity financing; failing to comply with a Ministerial Directive; and failing to assess and document the risk of a money laundering or a terrorist activity financing offence.
FINTRAC said the risks associated with money laundering, terrorist financing and sanctions evasion are rising in Canada along with the virtual currency industry.
“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,” Sarah Paquet, FINTRAC’s chief executive officer, was quoted as saying in a release.
This hefty fine is not the first time that Xeltox, previously known as Certa Payments Ltd., has run into problems with regulators.
In May, it was reported that the BC Securities Commission had temporarily banned Xeltox from trading securities and other market activities for alleged registration requirement violations under the province’s Securities Act. The ban, which prevented the company from buying or selling securities or doing promotional activities for itself or other companies, was for only a matter of weeks.
But the B.C. company’s record-setting fine from FINTRAC is in sync with a broader effort by authorities to crack down on online crime.
Finance Minister François-Philippe Champagne announced earlier this week that Ottawa’s upcoming budget will include plans for a new Financial Crimes Agency designed to improve Canada’s ability to tackle online scams, money laundering and other types of fraud,
The new plan will be at the centre of the government’s heftier strategy to fight fraud and will be supported by new legislative changes to the Bank Act, scheduled to be unveiled this spring. The new legislation will require banks and other financial institutions to play a larger and more proactive role in detecting and fighting various types of fraud.
According to the Canadian Anti-Fraud Centre, Canadians were scammed out of $643-million in online fraud in 2024, almost three times the figure from just four years earlier. Only between five and 10 per cent of these types of scams are reported, the government said.
FINTRAC, which reports to the minister of finance, is a financial intelligence unit with a mandate to detect, prevent and deter money laundering and terrorist financing activities while ensuring the protection of personal information.
National Post
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