Unregistered crypto companies in Canada facilitate money laundering, research shows
Summary
- Undercover investigations reveal that unregistered crypto companies across Canada are facilitating anonymous cash-for-crypto deals, violating money laundering rules.
- Platforms transact millions with minimal compliance: One store in Toronto exchanged cash using only an invoice’s serial number as ID.
- Experts warn of gaps in enforcement; FINTRAC is starved of resources as companies offer up to $1 million in unverified cash, fueling the criminal use of crypto.
Unregistered cryptocurrency exchange companies across Canada are facilitating large cash-for-crypto transactions without identity verification, while international platforms are offering to deliver up to $1 million in untraceable cash. according to to a joint investigation by Radio-Canada, CBC News, Toronto Star and La Presse.
The research revealed how these services allow individuals to move money with minimal compliance checks, exposing vulnerabilities that experts say enable criminal activity in the country’s digital financial sector.
Canada’s regulatory challenges with illicit funds in banking, casinos and real estate have extended to crypto services, where enforcement gaps and limited oversight have created channels for money laundering, the study found.
In one transaction in Toronto, an undercover reporter collected $1,900 in cash with only a $5 serial number for verification after transferring the tether via Telegram to a Ukraine-based exchange, 001k. The transaction took place at a Financial Transactions and Reports Analysis Center of Canada (FINTRAC) registered money transfer company.
The transaction violated Canadian anti-money laundering regulations that require money service companies to record recipient information for transfers of more than $1,000. The Toronto store processed the exchange through a manager who later claimed he used his own “legally earned” money, while the counter clerk said he had no knowledge of the situation, according to the investigation.
Journalists in Quebec received offers from 001k and another service to deliver $1 million and $890,000, respectively, to Montreal locations in exchange for tether transfers, without requiring identity verification, the investigation found.
According to data from Chainalysis, 001k has received more than $14.8 billion in cryptocurrency transfers since August 2022. The platform operates without FINTRAC registration in Canada.
Richard Sanders, an expert on crypto-to-cash operations, said services with “absolutely zero controls” allow unlimited crime. “I could not have predicted in my worst dreams the reality we are in now,” Sanders said.
Crystal Intelligence’s Nick Smart said Hong Kong’s crypto-to-cash firms processed at least $2.5 billion last year, calling them “a perfect place to operate as a criminal because no one will ask questions.”
Joseph Iuso, executive director of the Canadian Money Services Business Association, said FINTRAC does not have resources to oversee all of the more than 2,600 registered money services businesses, and faces greater challenges in overseeing unregistered operators.
One web directory lists more than two dozen unregistered crypto-to-cash services operating from Halifax to Vancouver, with several Toronto-based operators telling undercover reporters they would not ask for identification, according to the investigation.
FINTRAC declined to answer questions about the investigation but stated its willingness to take action through administrative sanctions and law enforcement referrals.
The enforcement gap persists despite Canada’s largest-ever crypto seizure in September, when the Royal Canadian Mounted Police dismantled the TradeOgre exchange and seized $56 million CAD in assets following a year-long investigation launched after a tip from Europol.
Canada is developing comprehensive stablecoin regulations ahead of the federal budget, after the United States passed the GENIUS Act earlier this year. The 2025 federal budget framework requires stablecoin issuers to maintain full reserves, establish clear redemption policies and implement risk management systems. The Bank of Canada will allocate $10 million for supervision over two years.
According to available data, only 3% of Canadians used Bitcoin for transactions in 2023. However, institutional interest has grown: a 2024 KPMG survey found that 39% of Canadian institutional investors had exposure to cryptocurrencies, up from 31% in 2021. The country is home to more than 3,000 Bitcoin ATMs, the world’s second largest concentration of these machines.
