Canada Imposes Record $177M Fine on Cryptomus for AML and Sanctions Breaches

Canada's financial intelligence agency has levied a record C$176.96 million (US$126.2 million) penalty against crypto exchange Cryptomus for failing to comply with anti-money-laundering (AML) and sanctions regulations. The fine, the largest ever issued by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), follows multiple unreported transactions linked to illicit activity and sanctioned jurisdictions.

FINTRAC reported that the British Columbia-based operator, officially registered as Xeltox Enterprises Ltd., failed to submit suspicious transaction reports for over 1,000 crypto transfers in July 2024 tied to darknet markets and wallets associated with child exploitation, fraud, and ransomware. Additionally, 7,557 transfers from Iran between July and December 2024 went unreported, alongside 1,518 high-value transactions exceeding C$10,000.

"Virtual currency entities remain vulnerable to exploitation by illicit actors when compliance controls are weak or ignored," said FINTRAC Director Sarah Paquet. She emphasized that the agency will continue to target firms that undermine Canada's financial integrity.

FINTRAC highlighted deficiencies in Cryptomus' compliance program, noting inadequate client due diligence and a lack of functional risk assessment processes. Earlier in 2024, the firm was banned from trading securities in British Columbia by the provincial securities regulator.

The penalty is part of a broader enforcement push targeting offshore exchanges that serve Canadian users. In July, KuCoin faced a C$19.5 million fine for operating without registration, while Binance paid C$6 million in 2024 for similar violations. FINTRAC stated that these measures aim to bring crypto platforms in line with compliance obligations applied to traditional financial institutions.

Canada has strengthened oversight of virtual asset service providers since 2021, requiring exchanges to submit detailed suspicious transaction reports, maintain client verification data, and report cross-border transfers exceeding C$10,000. Authorities are increasingly focused on platforms linked to darknet markets or sanctioned regions. FINTRAC's notice cited wallet addresses connected to Iranian entities previously referenced in U.S. Treasury sanctions advisories.

Legal experts noted the scale of non-compliance at Cryptomus could effectively remove the firm from the Canadian market. "The scale of non-reporting here goes beyond negligence—it's systemic disregard," said one Toronto-based compliance attorney. Cryptomus did not respond to requests for comment.

The move reflects broader efforts by Canadian regulators, including the Canadian Securities Administrators and the Bank of Canada, to tighten controls over digital asset flows and promote transparency in wallet addresses and counterparties. The record fine signals that failure to report suspicious or sanction-linked transactions will face zero tolerance, aligning Canada with global trends in crypto regulation across the G7.