Canada’s anti-money laundering watchdog has revoked the registrations of nearly three dozen cryptocurrency businesses, an effort experts say doesn’t go far enough to rein in the unruly sector.
The Financial Transactions and Reports Analysis Centre, or Fintrac, announced Tuesday that it has scrubbed 23 crypto firms from its national registry of businesses legally allowed to provide money services in Canada. Earlier in March, the agency had pulled the registrations of another 12 crypto firms.
The enforcement sweep follows a months-long joint investigation by the Star and a group of global news outlets led by the International Consortium of Investigative Journalists (ICIJ), which showed a proliferation of unlawful crypto companies in Canada that can be used to move illicit funds while bypassing law enforcement and regulators. Most recently, the Star and ICIJ revealed a cluster of unlawful crypto shops operating on and around Yonge Street, including two that have used wallets allegedly linked to Iran-backed terror groups.
The revocations this month mark an uptick in enforcement compared to recent years.
Fintrac has revoked the registrations of a total of 269 money services businesses over the past five years, and more than 10 per cent of those happened over a 10-day period in March.
“This represents a significantly increased pace of action, and our government will maintain this momentum,” Finance Minister François-Philippe Champagne said in a statement.
The minister also vowed to pursue new measures to address risks posed by virtual currency businesses, “which can be used to facilitate money laundering and fraud.”
Once a company’s registration with Fintrac is revoked, it can no longer legally operate.
Fintrac did not explain why it pulled any of the registrations. On its website, the agency says it can do so if an owner or operator is convicted of certain crimes, doesn’t answer the agency’s requests for information or fails to update Fintrac on changes to its name or address.
Industry experts told the Star that Fintrac’s announcement is a positive step, but that it’s not clear how striking these crypto shops from the registry helps address the concerns about money laundering and terrorism financing posed by unlawful businesses that were identified in the Star/ICIJ investigation.
“If Fintrac is going to tout this as doing something, it isn’t,” said cryptocurrency investigator Richard Sanders, noting that many of the crypto exchanges the Star found were operating unlawfully appear to still be in business.
Denis Meunier, a former deputy director at Fintrac, said the agency seems to be trying to send a message that “Fintrac is watching.” But he also pointed out that the registrations of two businesses on the list had already expired in 2024, raising questions about why the move is only happening now.
“I think they need to be quicker on the draw,” Meunier said.
A Fintrac spokesperson said generally speaking, a business remains registered even after its registration has expired if the agency is still in the process of reviewing the firm’s renewal application.
Joseph Iuso, the executive director of the Canadian Money Services Business Association, said the agency seems to be moving to use its power to revoke registrations more often — and to publicize it when it does.
“They’ve been criticized that they don’t have teeth, letting all these people register without checking. So I think they’re trying to show that, ‘Hey, we are checking and we do have teeth,’” Iuso said.
Fintrac spokesperson Mélanie Goulette Nadon said the agency has been “consistent in its forceful approach” to overseeing money services businesses like those that deal in crypto, and has been “proactively informing Canadians of these enforcement actions since 2022.”
The spokesperson said the regulator will be taking more action in the crypto sector in the coming days and weeks but provided no details.
Fintrac “is prohibited from disclosing information on compliance actions that may be ongoing in relation to a specific business,” she said.
Money services businesses like those that exchange crypto for cash are required to register with Fintrac, a requirement meant to deter money laundering and terrorist financing. But the Star/ICIJ investigation found that dozens of crypto businesses in the Greater Toronto Area were not registered with Fintrac to handle virtual currencies.
The investigation identified 50 businesses advertising crypto services in clusters along Yonge Street, from Toronto’s Little Iran neighbourhood up to Richmond Hill and beyond. Of those, 70 per cent were operating unlawfully.
One of the businesses included in the Star/ICIJ analysis had its registration revoked this month by Fintrac.
That business, Richmond Hill-based Danesh Exchange, registered with Fintrac in 2021 and was authorized to handle virtual currency and foreign money exchange services.
A Danesh staff member confirmed on the phone Thursday that Fintrac had pulled the company’s registration, but the business did not answer detailed questions by publication.
