The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has issued a record CAD $176,960,190 administrative monetary penalty on Xeltox Enterprises Ltd. of Vancouver, a reporting entity providing virtual currency transaction service (also operating as also operating under the name Cryptomus and previously known as Certa Payments Ltd).
The $176 million penalty levied against Xeltox is for the 2,593 instances across six types of violations where Xeltox contravened under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLFTA) and associated regulations, each causing severe harm and demonstrating significant, widespread non-compliance with regulatory requirements and subject to a penalty.
The violations include:
- Failure, on 1,068 separate occasions, to submit suspicious transaction reports for transactions involving known darknet markets and virtual currency wallets linked to criminal activity, such as trafficking in child sexual abuse material, movement of fraud proceeds, laundering of ransomware payments, and financial flows with reasonable grounds to suspect they were related to sanctions evasion;
- Failure to comply with a Ministerial Directive, as demonstrated in connection to financial transactions associated with the Islamic Republic of Iran;
- Failure to develop and apply written compliance policies and procedures that are kept up to date and, in the case of an entity, are approved by a senior officer;
- Failure to assess and document the risk of a money laundering offence or a terrorist activity financing offence related to its activities, taking into consideration the prescribed factors;
- Failure to submit, on four separate occasions, a notification of a change to the information provided in a prescribed application in the prescribed manner and with the prescribed information; and,
- Failure to report, on 1,518 separate occasions, the receipt from a client of an amount in virtual currency of $10,000 or more during a single transaction, together with the prescribed information.
The public notice Administrative monetary penalty on Xeltox Enterprises Ltd. is available for download from FINTRAC’s website.
For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403-4606.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.