FINTRAC Imposes $348K Penalty on Crystal Currency Exchange for AML Failures
| 2025-05-29
Canada’s financial watchdog FINTRAC has fined Crystal Currency Exchange over $348,000 for failing to meet anti-money laundering compliance standards.
Canada’s financial watchdog FINTRAC has fined Crystal Currency Exchange over $348,000 for failing to meet anti-money laundering compliance standards.
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) issued the penalty on 5 March 2025 following a compliance examination. The investigation uncovered nine separate violations of Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its associated regulations.
Repeated Failures in Reporting Suspicious Activity
According to FINTRAC, Crystal Currency Exchange Inc. failed to report three separate financial transactions deemed suspicious in the context of potential money laundering or terrorist financing. Although the company had previously submitted suspicious transaction reports for the same clients, it omitted other similar transactions, both before and after those initial reports.
These omissions were particularly concerning due to recognised risk indicators. These included unusually large cash transactions, foreign currency exchanges beyond expected volumes, dealings linked to high-risk jurisdictions, and client activity inconsistent with stated financial profiles. The failure to report such transactions, FINTRAC stated, prevents vital intelligence from reaching law enforcement agencies and regulators.
This violation was categorised as “very serious” under the regulatory framework.
Inadequate Cash and Funds Transfer Reporting
Further breaches involved failures to report large cash transactions and international funds transfers. FINTRAC found that the company did not file required reports for two large cash deposits and five international wire transfers—each exceeding CAD 10,000.
These lapses, while deemed “minor” by regulatory standards, still resulted in reduced transparency and impaired FINTRAC’s ability to generate actionable financial intelligence.
Compliance Programme Shortcomings
The remaining violations revealed significant deficiencies in the company’s compliance infrastructure. FINTRAC determined that Crystal Currency Exchange Inc. lacked an effective compliance officer and had failed to update its compliance documentation since at least 2017, despite repeated warnings during prior audits.
The agency also noted the absence of proper risk assessments, up-to-date written procedures, and an employee training programme. Crystal Currency Exchange Inc. did not maintain records of training sessions or document which staff had received instruction on anti-money laundering obligations.
A serious concern was the company’s failure to conduct a meaningful review of its own compliance programme. The review documents provided for 2021 were nearly identical to those from 2018 and lacked substantive evidence of internal audits, scope, or follow-up action.
Persistent Non-Compliance
In a previous communication, FINTRAC had advised Crystal Currency Exchange Inc. of these gaps during examinations in both 2015 and 2017. However, by 2022, no significant changes had been made. The compliance officer acknowledged during the 2022 review that no updates had been implemented due to lack of time, further stating the intention to delegate future updates to another individual.
According to FINTRAC, these failures signify a lack of due diligence and operational readiness to meet Canada’s financial regulatory obligations.
Context
Money services businesses in Canada are required by law to monitor, report, and mitigate risks related to money laundering and terrorist financing. This includes filing suspicious transaction reports, reporting large cash or cross-border fund transfers, and maintaining effective internal compliance frameworks.
FINTRAC is responsible for ensuring these standards are met. Administrative monetary penalties serve as enforcement tools to ensure institutions remain vigilant and cooperative in protecting the integrity of Canada’s financial system.
Crystal Currency Exchange Inc. has filed an appeal against the penalty with the Federal Court.
Repeated Failures in Reporting Suspicious Activity
According to FINTRAC, Crystal Currency Exchange Inc. failed to report three separate financial transactions deemed suspicious in the context of potential money laundering or terrorist financing. Although the company had previously submitted suspicious transaction reports for the same clients, it omitted other similar transactions, both before and after those initial reports.
These omissions were particularly concerning due to recognised risk indicators. These included unusually large cash transactions, foreign currency exchanges beyond expected volumes, dealings linked to high-risk jurisdictions, and client activity inconsistent with stated financial profiles. The failure to report such transactions, FINTRAC stated, prevents vital intelligence from reaching law enforcement agencies and regulators.
This violation was categorised as “very serious” under the regulatory framework.
Inadequate Cash and Funds Transfer Reporting
Further breaches involved failures to report large cash transactions and international funds transfers. FINTRAC found that the company did not file required reports for two large cash deposits and five international wire transfers—each exceeding CAD 10,000.
These lapses, while deemed “minor” by regulatory standards, still resulted in reduced transparency and impaired FINTRAC’s ability to generate actionable financial intelligence.
Compliance Programme Shortcomings
The remaining violations revealed significant deficiencies in the company’s compliance infrastructure. FINTRAC determined that Crystal Currency Exchange Inc. lacked an effective compliance officer and had failed to update its compliance documentation since at least 2017, despite repeated warnings during prior audits.
The agency also noted the absence of proper risk assessments, up-to-date written procedures, and an employee training programme. Crystal Currency Exchange Inc. did not maintain records of training sessions or document which staff had received instruction on anti-money laundering obligations.
A serious concern was the company’s failure to conduct a meaningful review of its own compliance programme. The review documents provided for 2021 were nearly identical to those from 2018 and lacked substantive evidence of internal audits, scope, or follow-up action.
Persistent Non-Compliance
In a previous communication, FINTRAC had advised Crystal Currency Exchange Inc. of these gaps during examinations in both 2015 and 2017. However, by 2022, no significant changes had been made. The compliance officer acknowledged during the 2022 review that no updates had been implemented due to lack of time, further stating the intention to delegate future updates to another individual.
According to FINTRAC, these failures signify a lack of due diligence and operational readiness to meet Canada’s financial regulatory obligations.
Context
Money services businesses in Canada are required by law to monitor, report, and mitigate risks related to money laundering and terrorist financing. This includes filing suspicious transaction reports, reporting large cash or cross-border fund transfers, and maintaining effective internal compliance frameworks.
FINTRAC is responsible for ensuring these standards are met. Administrative monetary penalties serve as enforcement tools to ensure institutions remain vigilant and cooperative in protecting the integrity of Canada’s financial system.
Crystal Currency Exchange Inc. has filed an appeal against the penalty with the Federal Court.
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