Canada’s financial crime watchdog, FINTRAC, has hit crypto exchange KuCoin with a record 19.5 million Canadian dollars ($14 million) fine for failing to follow anti-money laundering (AML) rules.
In an official release dated September 25, FINTRAC said that Seychelles-based Peken Global Limited, also operating as KuCoin, broke several Canadian financial rules by failing to register as a foreign money services business.
Why FINTRAC fined KuCoin?
Using blockchain analysis, FINTRAC found that the exchange also failed to report nearly 3,000 large virtual currency transactions of $10,000 or more between June 2021 and May 2024. Additionally, it did not submit 33 suspicious transaction reports, despite clear indicators of potential criminal or terrorist activity.
Some of these transactions involved exposure to darknet marketplaces, illegal digital platforms, or companies flagged by U.S. authorities for distributing materials used in synthetic drug production.
FINTRAC said failing to report such transactions can prevent authorities from gathering actionable financial intelligence, which is critical to protecting Canada’s financial system and public safety.
Sarah Paquet, FINTRAC’s Director and CEO, said the penalties are meant to protect Canadians and ensure businesses follow the rules. “Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime is in place to protect the safety of Canadians and the security of Canada’s economy,” she said.
KuCoin has appealed the fine in federal court, arguing that it does not meet the definition of a Canadian money services business and therefore should not have had to register with FINTRAC.
This is not KuCoin’s first run-in with Canadian regulators. In 2022, the Ontario Securities Commission fined both Bybit and KuCoin for allowing Ontario residents to trade unregistered securities. Bybit cooperated and paid a $2.5 million fine, while KuCoin was fined $2 million and faced additional investigation costs.