KuCoin Hit with Record Fine in Canada for Anti-Money Laundering Violations

Seychelles-based Peken Global Limited, the operator of leading cryptocurrency exchange KuCoin, has been slapped with a staggering fine of 19.5 million Canadian dollars (approximately 15 million USD) by Canada’s Financial Transactions and Reports Analysis Centre (FINTRAC). This penalty, the largest ever imposed by FINTRAC, addresses KuCoin’s non-compliance with Canada’s strict anti-money laundering (AML) regulations. The fine was officially announced in July and underscores Canada’s resolve in enforcing financial integrity within its borders.

FINTRAC determined that KuCoin failed to meet its obligations under Part 1 of Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Commenting on the case, Sarah Paquet, FINTRAC’s director and CEO, emphasized the importance of the regulatory framework, stating, “Canada’s AML and counter-terrorist financing frameworks exist to protect the safety of our economy and citizens. While we are committed to supporting businesses in compliance, we will also take decisive action against those who violate these obligations.”

Core Violations: Registration and Reporting Failures

Central to FINTRAC's findings were two major failings by KuCoin. First, the exchange did not register as a Foreign Money Services Business (FMSB), a legal prerequisite for firms offering financial services to Canadian citizens from outside the country. Second, KuCoin fell short of fulfilling critical reporting requirements. Specifically, the company neglected to report virtual currency transactions surpassing 10,000 Canadian dollars and failed to submit mandatory reports on suspicious transactions—both key measures aimed at detecting and preventing illicit financial activities such as money laundering and terrorist financing.

KuCoin Challenges the Ruling

Despite the steep penalty, KuCoin has pushed back. In its official response to FINTRAC’s decision, the company acknowledged the regulator’s verdict but expressed firm disagreement. KuCoin’s objections center on its classification as a Foreign Money Services Business and the severity of the monetary penalty, which the company described as “excessive and punitive.” Just days after the penalty was announced, KuCoin escalated the issue by filing an appeal with the Canadian Federal Court. In its appeal, the exchange is contesting both the classification rationale and the procedural fairness of FINTRAC’s actions.

A Pattern of Regulatory Hurdles: KuCoin’s History

This is not KuCoin’s first entanglement with regulators. Earlier this year, the cryptocurrency exchange faced a significant legal challenge in the United States. In January, KuCoin admitted to operating as an unlicensed money transmission business and reached a settlement involving approximately $300 million in fines and forfeitures. The legal resolution also saw high-ranking executives, including co-founders Chun Gan and Ke Tang, forfeit $2.7 million in cash, after which they exited the company.

KuCoin's regulatory struggles in the U.S. and Canada underscore the growing global scrutiny on cryptocurrency exchanges. Authorities worldwide are ramping up efforts to ensure compliance with AML, consumer protection, and licensing requirements—essential steps in legitimizing the otherwise volatile cryptocurrency industry.

What’s Next for KuCoin?

As regulatory environments become increasingly rigorous, KuCoin finds itself at a crossroads. Will the exchange adapt and strengthen its compliance mechanisms to align with local and international regulatory standards? Observers and market participants alike are keeping a close eye on KuCoin’s next moves as it works to safeguard its reputation and position in the ever-changing landscape of cryptocurrency trading.

With this latest fine breaking records in Canada, KuCoin faces immense pressure to overhaul its compliance strategy. Failure to do so risks further penalties and reputational damage in other jurisdictions, potentially affecting its global operations. How KuCoin reconciles with its growing regulatory liabilities may set the tone for its future trajectory in the cryptocurrency ecosystem.