Fintrac has imposed a $19.5 million administrative penalty on Kucoin for violating three areas at once. Kucoin, in turn, disagrees completely with the discovery of violations and is suing regulatory decisions.
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Three violations from the PCMLTFA perspective
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The initial regulatory claims concern the status of the diplomatic services business. Registration as a foreign MSB of players providing relevant services focused on Canada is a threshold condition for subsequent reporting and recordkeeping obligations.
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The second is related to a large cryptocurrency transaction of $10,000 in a single transaction. This refers to required reports that contain specified information, namely LVCTR.
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The third concerns suspicious transaction reports (STRs) where there is reasonable basis for doubting connections to money laundering and terrorist financing.
These three important requirements form the basis of the regime. Registration ensures compliance organizations, LVCTR reports provide volume and structure signals, and STR adds risk indicators.
Therefore, Fintrac argues for the forced nature and need to report on these points for financial institutions, money services businesses and adjacent sectors. Such companies must maintain compliance regimes and submit reports such as international e-fund transfers, large cash transactions, large cryptocurrency transactions (LVCTRs), suspicious transactions (STRs). Furthermore, regulators have emphasized in particular that STRs are important for viable financial information, with administrative financial penalties being applied to promote obedient behavior.
Regarding Kucoin, the regulator, namely Sarah Paquet, said:
“Canada’s anti-money laundering and counter-terrorism financing regime is in place to protect Canadians’ safety and the security of Canada’s economy. Fintrac will work with businesses to help them understand and comply with their legal obligations.
However, Kucoin has its own view on the situation, saying:
“Kucoin has received a decision from the Director of the Canadian Centre for Financial Transactions and Reporting Analysis (FINTRAC) in favour of a notice of violation issued on March 31, 2025.”
“We oppose both the discovery that Kucoin is a diplomatic services business and that the penalty that Kucoin asserts is inherently excessive and punitive. Kucoin exercised its statutory power and formally filed an appeal in the Federal Court of Canada on both substantive and procedural basis.”
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Where is the case going?
At this time, Kucoin exercises its right to appeal in federal courts of Canada, challenging both the foreign MSB classification and the size of sanctions. In court, they face a detailed review of the substantive and procedural basis that was alleged.
We monitor this case as Kucoin is one of the top cryptographic platforms and events that include it can affect the entire crypto industry. And since Canada is far from the minor market, the company rarely gives this more than full attention. Stay tuned for the latest updates to Crypto, Blockchain and Defi.