FINTRAC Hits KuCoin (Peken Global Limited) with $19.5M Penalty: A Turning Point for Crypto Compliance in Canada

On September 25, 2025, FINTRAC (the Financial Transactions and Reports Analysis Centre of Canada) announced one of the largest penalties in its history: a $19,552,000 administrative monetary penalty (AMP) against Peken Global Limited, better known as KuCoin.

KuCoin, a Seychelles-incorporated cryptocurrency exchange, was determined to be a foreign money services business (MSB) operating in Canada without proper registration. FINTRAC's compliance examination uncovered three major violations, ranging from failure to register, to failure to report thousands of transactions, to ignoring suspicious activity tied to dark web marketplaces and illicit chemical trade.

This case is a watershed moment for crypto compliance in Canada, showing that FINTRAC is willing to levy massive penalties against foreign virtual asset service providers (VASPs) that target Canadian clients.

The Three FINTRAC Violations

1. Failure to Register as a Foreign MSB (Serious Violation)

Under section 11.1 of the PCMLTFA, foreign businesses offering MSB services to Canadian clients must register with FINTRAC. KuCoin failed to do so, despite being given an opportunity.

FINTRAC determined that KuCoin:

• Provides money services business functions (virtual currency exchange and transfer).
• Does not have a physical presence in Canada.
• Directs services to Canadian clients and actively onboards them.

Without registration, FINTRAC could not supervise KuCoin's activities, undermining Canada's ability to safeguard its financial system.

2. Failure to File Large Virtual Currency Transaction Reports (LVCTRs) (Minor Violation)

Under section 33(1)(f) of the PCMLTFR, any receipt of virtual currency of $10,000 or more in a single transaction must be reported to FINTRAC, along with prescribed details.

Each unreported LVCTR represented lost financial intelligence, weakening FINTRAC's ability to detect and trace potential money laundering and terrorist financing activity.

3. Failure to File Suspicious Transaction Reports (STRs) (Very Serious Violation)

Perhaps the most troubling violation: KuCoin failed to report 33 suspicious transactions, despite clear indicators of money laundering and terrorist financing risk.

Examples included:

• Transactions linked to darknet marketplaces, mixers/tumblers, ransomware, and illicit gambling sites.
• Exposure to entities designated by the U.S. Office of Foreign Assets Control (OFAC) for distributing illicit precursor chemicals.
• Crypto transactions connected to businesses advertising chemical precursors used in synthetic drug manufacturing.
• Transactions involving wallets and entities tied to known criminal actors.

STRs are the most critical type of FINTRAC reporting, and failure to submit them is considered severe non-compliance.

Why This Penalty Matters

This $19.5M penalty is not just about KuCoin—it sends a broader message to the global crypto industry:

1. Foreign VASPs targeting Canadian clients must register as MSBs. Registration is mandatory, regardless of corporate domicile.
2. Blockchain analytics means regulators see what you see. Claiming ignorance of transactions won't work—FINTRAC uses advanced monitoring.
3. Suspicious Transaction Reports (STRs) are non-negotiable. Ignoring ML/TF indicators will be met with the harshest classification of penalties.
4. Canada is raising the stakes in crypto compliance. This penalty rivals U.S. enforcement actions and signals closer international coordination.

The Role of FINTRAC Reporting and the FINTRAC API

Canadian reporting entities—including MSBs, casinos, securities dealers, and foreign VASPs serving Canadians—are obligated to submit:

Traditionally, these reports were manual and time-consuming. Now, the FINTRAC API allows businesses to:

• Automate reporting of STRs, LCTRs, LVCTRs, and EFTRs.
• Validate submissions against FINTRAC's schemas to avoid errors.
• Integrate directly with transaction monitoring systems for seamless compliance.
• Maintain auditable trails of all submissions.

For crypto exchanges and MSBs, this means real-time compliance that scales with transaction volume.

Lessons for Crypto Exchanges and MSBs

The KuCoin case highlights several urgent compliance takeaways:

• Registration is step one. If you're serving Canadian clients, you must be registered with FINTRAC as an MSB or foreign MSB.
• LVCTRs matter. Reporting large virtual currency transactions is not optional.
• STRs are critical. Failing to report suspicious activity is the fastest way to draw regulatory scrutiny.
• Automation reduces risk. API-driven reporting ensures accuracy, timeliness, and scalability.
• Documentation is everything. Regulators operate on the principle: if it isn't documented, it didn't happen.

How Comply+ Helps Crypto MSBs and VASPs

Final Thoughts

The $19,552,000 penalty against KuCoin (Peken Global Limited) is a landmark moment for Canadian AML/ATF enforcement. It proves that FINTRAC is not only watching the crypto industry—it is prepared to act decisively.

For businesses, the takeaway is clear: FINTRAC reporting and compliance must be automated, documented, and proactive. The era of manual processes and reactive compliance is over.

With tools like the FINTRAC API and RegTech platforms such as Comply+, MSBs and VASPs can stay ahead of regulators, protect their business, and continue to grow in Canada's evolving financial landscape.