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Unregistered cryptocurrency exchange firms throughout Canada are taking advantage of regulatory loopholes by enabling substantial cash-for-crypto transactions without necessitating identity verification, while foreign platforms promise to deliver up to $1 million in untraceable cash.
An undercover investigation has exposed the ease with which individuals can transfer money using these services without any compliance checks, revealing a system that experts caution allows for limitless criminal activity in the country’s growing digital finance sector.
Canada’s persistent issues with illicit money in banking, casinos, and real estate have now infiltrated crypto services, where lax enforcement and insufficient oversight have forged new pathways for money laundering and illegal finance.
While blockchain technology permits investigators to trace certain transactions, crypto-to-cash services bypass controls at crucial entry and exit points, allowing drug cartels and potential terrorists to transfer funds anonymously through Canadian cities.
Undercover Investigation Reveals No-Verification Cash Transactions
A collaborative inquiry by Radio-Canada, CBC News, Toronto Star, and La Presse disclosed how easily criminals can access unregistered crypto-to-cash services across Canada.
In one transaction in Toronto, an undercover reporter entered a FINTRAC-registered money transfer business and obtained $1,900 in cash using merely a $5 bill’s serial number for verification, after sending tether to a Ukraine-based exchange 001k via Telegram.
An employee counting out $1,900 US to provide to a customer who wasn’t asked for any identification. | Source: CBC
This transaction contravened Canadian anti-money laundering regulations that mandate money service businesses to document recipient details for transfers exceeding $1,000.
Even though the Toronto location was registered with FINTRAC, it facilitated the unlawful exchange through a rogue manager who later asserted that he utilized his own cash “earned legally,” while the counter employee “had no awareness of the situation.”
Simultaneously, journalists in Quebec received proposals from 001k and another service to deliver $1 million and $890,000, respectively, to locations in Montreal in exchange for tether transfers, with no identity verification required.
Since August 2022, 001k has processed over $14.8 billion in cryptocurrency transfers according to Chainalysis data, yet it operates illegally in Canada without FINTRAC registration.
Industry Size and Enforcement Issues Escalate
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Richard Sanders, a prominent authority on crypto-to-cash operations, cautioned that services with “absolutely zero checks” enable unlimited crime.
“I could not have in my worst nightmares anticipated the reality we’re facing now,” Sanders remarked, while Nick Smart from Crystal intelligence noted that Hong Kong’s crypto-to-cash enterprises alone handled at least $2.5 billion last year, describing them as “an ideal environment for criminals because no one’s going to inquire.”
Joseph Iuso, executive director of the Canadian Money Services Business Association, confirmed that FINTRAC lacks the resources to supervise all 2,600-plus registered money services businesses, much less monitor unregistered ones.
Joseph Iuso, executive director of the Canadian Money Services Business Association. | Source: CBC
A web directory lists more than 20 unregistered crypto-to-cash services operating from Halifax to Vancouver, with multiple operators based in Toronto telling undercover reporters that they wouldn’t require identification.
FINTRAC declined to respond to inquiries regarding the investigation but stated it was “prepared to take strong measures as necessary” through administrative penalties and law enforcement referrals.
The enforcement gap continues despite Canada’s largest-ever crypto seizure in September, when the Royal Canadian Mounted Police dismantled the TradeOgre exchange and confiscated $56 million CAD in assets following a year-long investigation initiated after a tip from Europol.
Regulatory Framework Takes Shape
Canada is now hurrying to implement comprehensive stablecoin regulations ahead of its federal budget, following the United States’ enactment of the GENIUS Act earlier this year.
The 2025 federal budget framework will mandate stablecoin issuers to maintain full reserves, establish clear redemption policies, and implement robust risk management systems. The Bank of Canada will allocate $10 million over two years for oversight.
Canada will introduce its first federal framework for fiat-backed stablecoins under the 2025 budget, following the US model.#Canada #Stablecoinhttps://t.co/PjX4xPix3x
— Cryptonews.com (@cryptonews) November 5, 2025
Despite moderate crypto adoption rates, with only 3% of Canadians using Bitcoin for transactions in 2023, institutional interest has surged.
A 2024 KPMG survey indicated that 39% of Canadian institutional investors had crypto exposure, an increase from 31% in 2021. The country is home to over 3,000 Bitcoin ATMs, the second-largest concentration of these machines worldwide.
The post Unregistered Crypto Firms in Canada Fueling Million-Dollar Money Laundering appeared first on Cryptonews.
