Peken Global Limited's crypto exchange Kucoin argues it is not required to register with FinTRAC.Dado Ruvic/Reuters
Canada’s financial crime watchdog has issued a nearly $20-million penalty – its largest ever – against cryptocurrency exchange KuCoin for violating anti-money-laundering laws.
The Financial Transactions and Reports Analysis Centre of Canada, or FinTRAC, announced the $19,552,000 penalty against Seychelles-based Peken Global Ltd., which operates as KuCoin, on Thursday.
FinTRAC said KuCoin failed to register as a money-services business and to report suspicious transactions and large virtual currency transactions to the watchdog.
KuCoin has appealed the penalty, which was issued on July 28, to the Federal Court of Canada. The crypto exchange argues it is not required to register with FinTRAC because it does not meet the definition of a Canadian money-services business, according to the court filing.
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The case tests the reach of Canada’s regulatory regime as it relates to offshore entities such as cryptocurrency exchanges not headquartered in Canada.
At issue is whether or not KuCoin “directs” its services at persons or entities in Canada, according to the exchange’s legal filing. In a Nov. 28, 2024 letter, FinTRAC noted that KuCoin “directed” services to Canadians through a May, 2020, announcement that it deals in Canadian dollars and does not restrict Canadians from its platform, the document said.
However, KuCoin argued that it does not market its services specifically to Canadians or offer services in Canadian dollars, according to the court document.
The penalty is the latest in a series of recent enforcement actions by Canada’s anti-money-laundering watchdog, which has been ramping up its enforcement activity.
In its most recent fiscal year, FinTRAC issued 23 notices of violation to businesses that it found had failed to comply with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act – the largest number of such notices the watchdog has issued in a single year. In total, FinTRAC levied more than $25-million in penalties in 2024-25.
Ottawa is looking to tighten financial-crime laws ahead of an international review of Canada’s anti-money-laundering regime by the Financial Action Task Force. The intergovernmental body, which sets standards to combat money laundering and terrorist financing, will evaluate the effectiveness of Canada’s regime for combatting financial crime.
The new measures included in the federal government’s proposed border security bill include significantly increased fines and restrictions on large cash transactions.
KuCoin’s lawyer, Danielle Royal, did not respond to a request for comment.
FinTRAC said it used blockchain technology to determine that between June 1, 2021, and May 8, 2024, KuCoin failed to report large virtual currency transactions of $10,000 or more on 2,952 occasions.
The anti-money-laundering watchdog also determined that in 33 instances, the crypto exchange failed to submit suspicious transaction reports when it was reasonable to suspect that transactions were related to money laundering or terrorist financing.
For instance, FinTRAC identified transactions between KuCoin and dark web marketplaces suspected of facilitating the sale of illegal goods and services, as well as transactions linking the exchange to a Canadian company designated by the U.S. Office of Foreign Assets Control for distributing illegal precursor chemicals and equipment used to produce synthetic drugs.
In 2022, the Ontario Securities Commission permanently banned KuCoin from the province’s capital markets and slapped it with a $2-million penalty, as well as $96,550.35 in costs, for operating an unregistered crypto-asset trading platform. It’s unclear whether KuCoin paid the OSC penalty.
Earlier this year, KuCoin pleaded guilty to one count of operating an unlicensed money transmitting business in the United States and agreed to pay more than US$297-million in monetary penalties.
KuCoin violated U.S. anti-money-laundering laws by failing to register with the U.S. Treasury Department’s Financial Crimes Enforcement Network, report suspicious transactions and implement effective anti-money-laundering controls, the U.S. Attorney for the Southern District of New York said in a news release last January.
The platform was founded in 2017 and has since become one of the largest cryptocurrency exchanges in the world, with more than 30 million customers and billions of dollars’ worth of daily trading volume, the U.S. Attorney’s Office said.