In Canada, illicit crypto-to-cash schemes linked to money laundering involve major exchanges and an Armenian-run cash desk in Toronto, raising concerns among law enforcement and regulatory bodies.
These activities demonstrate vulnerabilities in crypto regulations, pose significant financial risks, and prompt government and exchanges to strengthen compliance measures, highlighting the pressing need for enhanced oversight and due diligence.
Recent investigations reveal illicit crypto-to-cash schemes in Canada linked to money laundering through unregulated exchanges. Enhanced regulatory oversight is underway to counteract these activities, as highlighted in the Canada’s updated assessment on money laundering.
Entities behind these operations, like an Armenian-run storefront in Toronto, remain part of the shadow financial system. Major players like Binance and Kraken are implicated, though they emphasize compliance with law enforcement. As a Kraken Spokesperson expressed, “We cooperate with law enforcement and maintain rigorous know-your-customer and due-diligence procedures at onboarding and throughout the client relationship. We monitor all deposits and withdrawals.”
Authorities Tighten Grip on Crypto Cash-Desk Networks
Authorities are intensifying efforts to curb these cash-desk networks, given their massive transaction volumes. Exchanges like Kraken maintain their commitment to rigorous KYC procedures.
The financial consequences include potential market shifts in Tether (USDT) usage. Historic trends suggest these regulatory crackdowns may lead to short-term market shocks and migration of activities to other jurisdictions. For a deeper understanding of the global landscape, refer to the 2025 Chainalysis Crypto Crime Report.
Canadian Exchanges Labelled High-Risk for Money Laundering
Past cases in Dubai and other cities have involved similar laundering patterns, targeting BTC and ETH. The Canadian risk assessments consistently outline crypto exchanges as high-risk areas for money laundering according to their 2025 National Risk Assessment.
Experts emphasize the criminal syndicates’ need to move cash, which often results in temporary drops in associated asset flows but not necessarily long-term market stability changes. As noted by Pamela Clegg, a blockchain investigation expert, “This indicates a connection to a criminal syndicate that needs to offload cash, especially if they are paying people to take their money.”
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