Kucoin Fined $14 Million by Canada's Anti-money Laundering FINTRAC

• Kucoin was fined $14 million by Canada's anti-money laundering watchdog FINTRAC.

• Peken Global failed to register as a foreign money services business and did not report large virtual currency transactions.

  
  

Canada's anti-money laundering watchdog has handed down its largest-ever penalty, fining the operator of crypto exchange KuCoin for major compliance failures.

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) announced on Thursday that Peken Global Limited, the Seychelles-based firm behind KuCoin, was fined $14.09 million.

Kucoin Fined $14.09 million, the largest Fine Ever Imposed by FINTRAC.

According to FINTRAC, Peken Global failed to register as a foreign money services business, did not report large virtual currency transactions of C$10,000 or more, and neglected to file suspicious transaction reports, all mandatory requirements under Canadian financial crime regulations.

The regulator stressed that these were not minor oversights but "very serious" violations. Using blockchain analytics, FINTRAC identified nearly 3,000 unreported transactions worth over C$10,000 between June 2021 and May 2024.

Links to Darknet and Criminal Activity

The watchdog said KuCoin's systems allowed transactions tied to darknet marketplaces, mixing services, questionable gambling platforms, ransomware, and theft reports to slip through undetected.

In particular, FINTRAC cited 33 suspicious transactions that should have been flagged, involving wallets connected to suspected criminals and distributors of precursor chemicals for synthetic drugs. These findings suggest systemic failures in KuCoin's anti-money laundering controls and reporting obligations in Canada.

KuCoin's Response and Appeal

Peken Global has not yet publicly responded to media inquiries but has filed an appeal of the penalty to Canada's federal court. This marks the second time a Seychelles-based crypto entity has clashed with Canadian regulators.

In 2022, Ontario's Capital Markets Tribunal sanctioned Mek Global Ltd. and PhoenixFin Pte Ltd. for trading securities without registration and distributing them illegally. Both were fined $2 million but have yet to pay, according to the Ontario Securities Commission.

Timing Ahead of FATF Audit

The record fine comes as Canada prepares for a Financial Action Task Force (FATF) audit in November. The global financial crime watchdog will assess Canada's readiness and effectiveness in combating money laundering and terrorism financing.

By hitting KuCoin's operator with its harshest penalty yet, FINTRAC is signaling both to FATF and to the broader crypto industry that Canada intends to tighten enforcement against non-compliant players.

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