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Bitcoinist 2025-01-25 10:00:28

Crypto Exchanges Under Scrutiny as Canada Cracks Down On Drug-Related Money Laundering

Canada appears to be tightening its surveillance of cryptocurrency transactions as part of an ongoing effort to combat money laundering linked to synthetic opioids—hard drugs. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) recently issued an alert pointing out how digital assets are being used to “clean illicit funds tied to fentanyl and opioid trafficking.” This alert marks an update to a 2018 report and includes newly identified risk indicators derived from “detailed analysis” of financial data, transaction patterns, and law enforcement insights. The Scrutiny: Monitoring Of Crypto Transactions The latest move by FINTRAC comes in response to the growing role of cryptocurrencies in laundering proceeds from illegal drug sales. The Canadian authority has outlined multiple red flags to assist law enforcement and financial institutions in identifying suspicious activity within the crypto sector. These include patterns such as large crypto-to-fiat conversions involving new accounts, multiple virtual wallets obscuring transaction sources, and deposits into exchanges from accounts flagged for high-risk regions or previously identified as suspicious. Furthermore, FINTRAC’s alert aligns with Canada’s broader involvement in the North American Drug Dialogue, a trilateral initiative aimed at tackling synthetic opioid trafficking. As part of this effort, FINTRAC encourages financial institutions and virtual asset service providers (VASPs) to integrate the new risk indicators into their AML strategies. The agency’s collaboration with Project Guardian—a public-private partnership including financial institutions, law enforcement, and international stakeholders—further underscores the importance of a coordinated response. Originally launched by the Canadian Imperial Bank of Commerce in 2018, Project Guardian focuses on combating money laundering tied to synthetic opioids. As part of this framework, Canadian authorities are pushing for better cooperation among VASPs, regulators, and financial institutions to identify and prevent illicit financial flows. A Call for Industry-Wide Collaboration Notably, the updated alert stresses the need for collective action across the cryptocurrency ecosystem. By involving a diverse range of stakeholders—from exchanges to banks—Canada might be aiming to strengthen its defenses against the use of digital assets in drug-related money laundering. FINTRAC’s emphasis on education and the incorporation of these risk factors into existing compliance programs could be a step toward enhancing transparency and accountability within the sector . In the long term, such measures could improve Canada’s ability to detect and disrupt money laundering activities associated with the synthetic opioid trade. By staying ahead of the financial crime tactics, the country may seek not only to curb illicit fund flows but also to safeguard the integrity of its financial system. Featured image created with DALL-E, Chart from TradingView

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