Canadian intelligence flags crypto-to-cash services as ‘knowingly facilitating money laundering,’ document shows
As scammers and terrorists increasingly turn to crypto, a Canadian intelligence office is raising alarms about risks posed by an emerging industry offering discreet means to convert cryptocurrency to large sums of physical cash and vice versa.
A substantial portion of these services across Canada are being “heavily exploited for illicit purposes” and are “knowingly facilitating money laundering, sanctions evasion” and a variety of “transnational organized crime activities,” according to a Canadian intelligence memo reviewed by the International Consortium of Investigative Journalists.
The memo’s assessment shows top financial intelligence officials echoing a concern that some crypto experts have voiced with growing urgency over the past year: A worldwide industry of services converting cryptocurrency into large sums of physical cash — often with few questions asked and conducted with deep anonymity — has opened a gaping hole in the global bulwark against dirty money.
the Strategic Intelligence, Research and Analytics Unit, the intelligence-gathering office within FINTRAC, the country’s agency overseeing efforts to combat money laundering and terror financing.
Garry Clement, who formerly ran the Canadian national police’s proceeds of crime program, told ICIJ that he’s not surprised by the government assessment.
Crypto-to-cash operators “service really professional money launderers,” Clement said. Their money, he added, “comes from the drug trade, it comes from human smuggling, it comes from massive amounts of fraud and it comes from a lot of cyber crime.”
The memo notes that recent media reporting has highlighted the rise of such services in Canada. Last November, ICIJ and 37 other news organizations released the Coin Laundry, a global investigation that examined illicit finance in cryptocurrency around the world, including Canada’s thriving crypto-to-cash businesses. These services allow holders of cryptocurrency to cash out huge sums without touching the mainstream banking system. In doing so, these operations sidestep banking systems’ traditional safeguards on dirty money tied to organized crime, human trafficking or foreign sabotage operations.
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