Michaela
Unregistered crypto exchanges in Canada have reportedly been evading finance laws by offering to purchase large amounts of digital assets without proper registration or ID verification, and two international platforms have allegedly proposed delivering up to $1 million in cash for crypto.
Key Points
- Per the investigation, an undercover journalist visited a FINTRAC-registered money transfer business in Toronto and obtained $1,900 in cash using only a $5 bill serial number for verification
- The funds were sent as Tether to a Ukraine-based exchange, 001K, via Telegram
- The transaction violated Canadian anti-money laundering rules, which require money service businesses to record recipient information for transfers over $1,000
According to a report by CBC, a joint investigation by Radio-Canada, CBC News, Tornoto Star, and La Presse indicated that several services have allowed users to move funds without compliance checks, creating a system that could enable widespread illicit activity in Canada’s digital finance sector.
Although blockchain can make certain transactions traceable, crypto-to-cash services bypass key controls at entry and exit points, allowing drug cartels and potential terrorists to transfer funds anonymously across Canadian cities.
Per the investigation, an undercover journalist visited a FINTRAC-registered money transfer business in Toronto and obtained $1,900 in cash using only a $5 bill serial number for verification. The funds were sent as Tether to a Ukraine-based exchange, 001K, via Telegram. The transaction violated Canadian anti-money laundering rules, which require money service businesses to record recipient information for transfers over $1,000.
Related: British Hacker Danny Khan Suspected Caught in Dubai With $18.5M Crypto
Although the money transfer business was FINTRAC-registered, the unauthorized transaction was carried out by a rogue manager, who later asserted that he used his own funds, claiming they were legally obtained.
Journalists in Quebec reported receiving offers from 001K and another service to deliver $1 million and $890,000, respectively, to Montreal addresses in exchange for Tether, with no identity checks. Since August 2022, 001K has processed more than $14.8 billion in crypto transfers, according to Chainalysis, yet it continues to operate in Canada without FINTRAC registration.
Joseph Iuso, executive director of the Canadian Money Services Business Association, noted that FINTRAC does not have sufficient resources to monitor all 2,600-plus registered money service businesses, let alone unregistered crypto exchanges. A web directory lists more than 20 unlicensed crypto-to-cash services, with several Toronto-based providers admitting to undercover reporters that they would not ask for identification.
Related: Matt Hougan Says Strategy Isn’t at Risk of Forced Selling Bitcoin
The growing prevalence of unregulated crypto-to-cash services highlights a broader challenge for Canada’s financial oversight system. Regulators face increasing pressure to modernize compliance frameworks and invest in tools that can effectively track illicit activity across digital currencies. For consumers and businesses alike, the situation spotlights the importance of using licensed platforms and exercising caution when engaging with emerging crypto services.
Read More
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- India Orders 25 Crypto Exchanges Offline in Major AML Crackdown
- FCA Sues HTX Over Illegal UK Crypto Ads — Big Warning for Exchanges
MICHAELA
Michaela is a news writer focused on cryptocurrency and blockchain topics. She prioritizes rigorous research and accuracy to uncover interesting angles and ensure engaging reporting. A lifelong book lover, she applies her passion for reading to deeply explore the constantly evolving crypto world.
