Fintrac commences crypto fraud crackdown
Crypto scammers, you’ve been warned.
Canadian regulators are tired of being bested by sketchy crypto traders.
What happened: Fintrac — Canada’s money laundering watchdog — has stripped the registrations of 53 money services businesses (MSBs) based in B.C. since the start of March, per the Investigative Journalism Foundation. The spree is part of a wider clampdown on shady crypto firms carrying out scams, criminal financing, and illegal money transfers.
- According to a report from March, Fintrac revoked 269 MSB licences over a five-year period — more than 10% of them were stripped in a 10-day stretch last month.
Zoom out: Crypto exchanges must register with Fintrac as an MSB to operate in Canada and offer buying, selling, and trading services. However, once registered, many of these firms simply reroute the crypto traded on their platforms to foreign exchanges and wallets.
- The registration process allows scammers to lure customers, using the registration as a sign of legitimacy, only to move their funds to an unregulated offshore exchange.
Why it matters: Canada’s lax protections have earned it a reputation as a global laggard in fighting crypto fraud. This recent crackdown — along with changes requiring criminal background checks for MSB registrations — suggests that regulators have finally gotten the memo.
Yes, but: Critics believe that tighter, crypto-specific regulation is still needed, and that regulators and law enforcement must have more capacity to get a fair shot at combating the many illicit firms that don’t even bother to register.—QH