A cryptocurrency company based in British Columbia is contesting a fine of nearly $177 million imposed by Canada’s anti-money laundering agency recently. Xeltox Enterprises Ltd. has filed an appeal in Federal Court, claiming that the penalties issued by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) for breaches of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act were due to “legal errors.”
The company asserts that FINTRAC alleged violations for not reporting suspicious transactions, including over 7,500 transactions linked to Iran, which Xeltox states it had no knowledge or control over. According to the appeal, Xeltox utilizes software licensed from a Panama-based company that owns the Crytomus platform, which FINTRAC incorrectly identified as the same entity.
Xeltox Enterprises indicates that it is registered with FINTRAC as a money services business under the act, and the alleged infractions were carried out by “foreign licensees” of the Cryptomus platform with no ties to Canada. In response, FINTRAC’s director and CEO, Sarah Paquet, mentioned that the record penalty was a result of “numerous violations” in the case, encompassing issues like child sexual abuse material, fraud, ransomware payments, and sanctions evasion.
FINTRAC discovered 1,068 instances where Cryptomus failed to submit reports for transactions in July 2024 involving darknet markets and virtual currency wallets associated with criminal activities. The agency emphasized that darknet markets and virtual currencies provide anonymity, facilitating criminal operations.
In addition to money laundering law violations for not flagging suspicious transactions, Cryptomus was found to have neglected to report 7,557 transactions originating from Iran between July 1 and Dec. 31, 2024. In the 2024-25 period, FINTRAC issued 23 violation notices to non-compliant businesses, the highest number in a single year, resulting in penalties exceeding $25 million. Since gaining the legislative authority in 2008, FINTRAC has imposed over 150 penalties.