Unregistered Crypto Firms in Canada Fueling Million-Dollar Money Laundering
Unregistered crypto change corporations throughout Canada are exploiting regulatory gaps by facilitating massive cash-for-crypto transactions with out requiring identification verification, whereas worldwide platforms provide to ship as much as $1 million in untraceable money.
An undercover investigation revealed how simply anybody can transfer cash by means of these providers with zero compliance checks, exposing a system that consultants warn allows limitless prison exercise throughout the nation’s increasing digital finance sector.
Canada’s longstanding issues with soiled cash in banking, casinos, and actual property have now prolonged into crypto providers, the place weak enforcement and insufficient oversight have created new channels for laundering and illicit finance.
While blockchain expertise permits investigators to trace some transactions, crypto-to-cash providers get rid of controls at vital entry and exit factors, enabling drug cartels and potential terrorists to maneuver funds anonymously by means of Canadian cities.
Undercover Operation Exposes Zero-Verification Cash Transactions
A joint investigation by Radio-Canada, CBC News, Toronto Star, and La Presse uncovered how simply criminals can entry unregistered crypto-to-cash providers all through Canada.
In one Toronto transaction, an undercover reporter walked right into a FINTRAC-registered cash switch enterprise and picked up $1,900 in money utilizing solely a $5 invoice serial quantity as verification, after transferring tether to a Ukraine-based change 001k through Telegram.
The transaction violated Canadian anti-money laundering rules requiring cash service companies to file recipient info for transfers exceeding $1,000.
Despite being registered with FINTRAC, the Toronto storefront processed the unlawful change by means of a rogue supervisor who later claimed he used his personal money “earned legally,” whereas the counter worker “had no data of the state of affairs.“
Meanwhile, journalists in Quebec obtained affords from 001k and one other service to ship $1 million and $890,000, respectively, to Montreal areas in change for tether transfers, with no identification verification required.
Since August 2022, 001k has obtained over $14.8 billion in cryptocurrency transfers based on Chainalysis knowledge, but it operates illegally in Canada with out FINTRAC registration.
Industry Scale and Enforcement Challenges Mount
Richard Sanders, a number one knowledgeable on crypto-to-cash operations, warned that providers with “completely zero checks” facilitate limitless crime.
“I couldn’t have in my worst desires predicted the truth we’re in now,” Sanders stated, whereas Nick Smart from Crystal intelligence famous that Hong Kong’s crypto-to-cash companies alone processed a minimum of $2.5 billion final yr, calling them “an ideal place to function as a prison as a result of nobody’s going to ask any questions.“
Joseph Iuso, govt director of the Canadian Money Services Business Association, confirmed FINTRAC lacks assets to supervise all 2,600-plus registered cash providers companies, not to mention police unregistered ones.
One net listing lists greater than 20 unregistered crypto-to-cash providers working from Halifax to Vancouver, with a number of Toronto-based operators telling undercover reporters they wouldn’t request identification.
FINTRAC declined to reply questions concerning the investigation however said it was “ready to take robust motion as crucial” by means of administrative penalties and legislation enforcement referrals.
The enforcement hole persists regardless of Canada’s largest-ever crypto seizure in September, when the Royal Canadian Mounted Police dismantled the TradeOgre change and seized $56 million CAD in property following a year-long investigation launched after a Europol tip.
Regulatory Framework Takes Shape
Canada is now racing to implement comprehensive stablecoin regulations forward of its federal price range, following the United States’ passage of the GENIUS Act earlier this yr.
The 2025 federal price range framework would require stablecoin issuers to take care of full reserves, set up clear redemption insurance policies, and implement strong danger administration methods. The Bank of Canada will allocate $10 million over two years for oversight.
Canada will introduce its first federal framework for fiat-backed stablecoins underneath the 2025 price range, following the US mannequin.#Canada #Stablecoinhttps://t.co/PjX4xPix3x
— Cryptonews.com (@cryptonews) November 5, 2025
Despite average crypto adoption charges, with solely 3% of Canadians utilizing Bitcoin for transactions in 2023, institutional curiosity has grown considerably.
A 2024 KPMG survey found that 39% of Canadian institutional investors held crypto exposure, up from 31% in 2021. The nation hosts over 3,000 Bitcoin ATMs, the world’s second-largest focus of those machines.
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