Unregistered crypto-cash services across Canada enabled high-value transactions with no identity checks, creating easy pathways for money laundering.
Summary
- Unregistered crypto-cash services across Canada allowed large transfers without identity checks, creating easy channels for money laundering through weak oversight.
- Undercover tests showed operators handing out cash after tether transfers with almost no verification, despite clear anti-money-laundering rules.
- Offshore platforms and domestic shops offered high-value cash deals, revealing enforcement gaps even as Canada prepares new stablecoin regulations.
Unregistered crypto-cash services across Canada are allowing people to convert large amounts of money with almost no identity checks.
A report by CBC news showed how both local shops and offshore platforms enable cash-for-crypto deals outside normal compliance rules.
Reporters found that a person can move funds through these services with minimal questioning, creating openings that specialists say are useful for criminal activity in Canada’s digital finance sector.
The country already struggles with illicit money flows in traditional areas such as casinos, real estate, and banking. The same weaknesses now appear in crypto services, where gaps in oversight make it easy to bypass required reporting.
Blockchain tracing helps in some cases, but crypto-to-cash services remove most checks at the crucial points where money enters or exits the system.
One undercover test in Toronto showed how loose the process can be. A FINTRAC-registered money transfer shop handed over $1,900 in cash after the reporter verified only a $5 bill serial number. The reporter had sent tether to 001k, a Ukraine-based exchange reachable through Telegram.
Under Canadian anti-money-laundering rules, any transfer above $1,000 requires collecting information about the recipient. The store did not do that. A manager later claimed he used his own cash and said it was “earned legally,” while the counter staff said they did not know what had happened.
In Quebec, journalists from the same investigation were offered up to $1 million in cash delivery from 001k and another service. The only requirement was to send tether; no identity documents were requested. Chainalysis data shows 001k has handled more than $14.8 billion in crypto transfers since August 2022, yet it is not registered with FINTRAC.
Richard Sanders, who investigates crypto-to-cash networks, said that services with “absolutely zero checks” create an environment where unlimited crime is possible.
Nick Smart from Crystal Intelligence added that crypto-to-cash shops in Hong Kong processed at least $2.5 billion last year and described them as ideal for criminals because “no one’s going to ask any questions.”
Canada’s own oversight struggles were also noted. Joseph Iuso, head of the Canadian Money Services Business Association, said FINTRAC does not have the capacity to fully monitor all 2,600-plus registered money service businesses.
Separately, one online directory lists more than 20 unregistered crypto-cash operators across the country, from Halifax to Vancouver. Several Toronto operators told undercover reporters they would not ask for identification.
FINTRAC declined to comment directly on the investigation but said it is prepared to issue penalties or refer cases to law enforcement. This gap in enforcement remains even though Canada recently conducted its largest crypto seizure to date. In September, the RCMP dismantled the TradeOgre exchange and seized $56 million CAD after a year-long probe triggered by a Europol alert.
Canada is now working on a full regulatory framework for stablecoins as part of its upcoming federal budget. The rules will require full reserves, clear redemption procedures, and risk controls. The Bank of Canada will allocate $10 million over two years to support this oversight.
Crypto adoption remains present in the country. Data shows that 3% of Canadians used Bitcoin (BTC) for payments in 2023, while a 2024 KPMG study reported that 39% of institutional investors in Canada held crypto exposure, up from 31% in 2021. The country also has more than 3,000 Bitcoin ATMs, the second-largest network in the world.
