One address, 76 foreign currency dealers: Inside Canada's money service business 'clusters'

An IJF and CTV News investigation has found dozens of cases across Canada where multiple money services businesses (MSBs) are incorporated at the same address, sometimes without the knowledge or consent of the location's actual occupant (Natali_Mis / Getty Images)

Editor's note: This story is a collaboration between the Investigative Journalism Foundation (IJF) and CTV National News.

The first thing you see at an office space in downtown Vancouver is a vegan pudding shop.

Deeper inside, there’s a massage therapy clinic and a co-working space.

But on paper, this three-story building — once a bank — is also home to 76 foreign currency dealers, 8 money transfer businesses and 6 registered cryptocurrency exchanges.

And none of them are physically there.

An IJF and CTV National News investigation has found this space to be one of dozens of cases across Canada where multiple money services businesses (MSBs) are incorporated at the same address, sometimes without the knowledge or consent of the location’s actual occupant.

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Financial crime experts say it goes against the spirit of Canada’s registration requirements for such businesses, which are considered high-risk for money laundering and terrorist financing.

“If you’re able to have 70 in one building, that’s just an abuse of the whole system,” said Peter German, a former RCMP deputy commissioner who authored two reports on money laundering in British Columbia.

Some of the MSBs identified by the IJF and CTV News in such locations have allegedly been involved in fraudulent investment schemes.

One of those addresses is 500-7030 Woodbine Ave. in Markham, Ont., which is the listed location for 97 MSBs.

One of those MSBs was Metaverse Foreign Exchange Group Inc. (MTFE), a Canadian company accused by authorities in Bangladesh and Sri Lanka of helping propagate an alleged pyramid scheme that affected hundreds of thousands of investors who lost more than US$2 billion.

MTFE’s corporate address was 500-7030 Woodbine Avenue in Markham, Ont., on the fifth floor of an office tower.

At one time, this single office unit in Markham was home to 97 different money services companies, including 95 registered foreign currency exchanges.

But there’s little evidence any of them ever did business there — or that they were even actual tenants.

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A manager at the shared office space, whose name and identity we’re keeping confidential, told CTV News that it's difficult to keep track of all the potentially illegal businesses using their address.

The manager told CTV News that “fraudulent people know that business centers are easy prey (in Canada) because they can use that address and it's a legitimate registered business address but they're not paying to use it”

One company at the Vancouver location — whose registration was revoked this year — had a director with a listed address in Russia , which has been subject to intense sanctions since its 2022 invasion of Ukraine. Others appear to be directed by people who are also directors of companies in Cyprus and other high-risk jurisdictions for money laundering.

Sasha Caldera, a campaign director for the non-profit Publish What You Pay, believes financial criminals are taking advantage of critical gaps in Canada’s enforcement regime.

“When we allow fraudulent companies to register in Canada, it sends a signal to not only Canadians but everyone abroad that Canada is open for business for the worst people,” said Caldera. “And we need to shut that down.”

‘The list of companies who owe us money’

Money services businesses, or MSBs, are businesses that offer financial services like wire transfers or currency exchanges.

The vast majority are legitimate businesses used by Canadians to trade currency or send money abroad. They range from large wire transfer businesses to virtual currency exchanges to cheque cashing services run out of small grocery stores.

They can also be used to launder money. That’s why they’re required to register with the Financial Transactions and Reports Analysis Centre of Canada, or Fintrac, the country’s financial watchdog.

An IJF and CTV News analysis of Fintrac’s registry, though, found many of those companies are registering in spaces already occupied by at least one other MSB.

As of February 2024, there were 3,008 actively registered MSBs in Canada, at least 1,247 of which were located in the same building as at least one other MSB. A more recent analysis was not possible because Fintrac was hit with a cyberattack in March, limiting access to its public registry.

That analysis does not include the roughly 2,700 MSBs whose registrations have lapsed, been revoked or otherwise stopped. If they are included, then a staggering 2,061 out of 5,705 total MSBs share a building with at least one other MSB.

And at least 39 locations across Canada are the registered address for five or more MSBs.

Oftentimes, those locations are office companies or co-working spaces that allow businesses to use their addresses for the purpose of corporate incorporation for a fee.

The actual occupant of the Vancouver location claimed by those MSBs is a co-working space that does offer such a service.

But Minna Van, the service's co-founder, says most of the 90 MSBs registered to her company’s address on paper have no relationship with her business.

“Many companies just use our address for [a] Google location or to incorporate but have never engaged our services,” Van wrote in an email. When given a list of the 90 MSBs listing her address, Van said her company had a business relationship with just 28 of them.

She referred to the rest of them as “the list of companies who owe us money.”

Van said she has considered taking legal action against those companies. But she says the cost for legal fees outstrips what her company would win in court.

Van said her company has protocols in place with the RCMP and Canada Post to detect suspicious activity. She said she also requires clients to provide completed incorporation paperwork and two pieces of photo identification.

“As a small business, we can only screen so much via active incorporation papers, personal ID submissions, and active business licenses. Ultimately, we do not have the resources or authority to enforce; we rely on regulatory and enforcement agencies to do their jobs,” Van wrote in her email.

The IJF and CTV News asked the provincial ministry of finance if companies who use Van’s address without permission are breaking the law.

Spokesperson Erin Hughes said the province’s business registry has the power to order companies to change their address. If they refuse, they can be dissolved. Directors or officers who knowingly allow false information to be filed can also face a $10,000 fine.

“We are not aware of any money services businesses or relevant individuals being required to pay penalties,” said Hughes.

‘Whack-a-mole’

Joseph Iuso, the executive director of the Canadian Money Services Business Association, says those “clusters” of MSBs are sometimes the result of directors using so-called “company service providers” to incorporate a company in Canada.

Similar companies may also provide a registered address, either by providing their own or by paying a different company for “virtual address” services.

In the case of MSBs, Iuso said they are often used by bad actors.

“We have challenged FINTRAC over the last few years on this situation, and they are well aware of it, hence why many are de-listed,” Iuso said.

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Since 2022, FINTRAC has revoked the registration of 160 MSBs. Of those, 110 shared just seven addresses.

One of those addresses is 500-7030 Woodbine Ave. in Markham, Ont., where 85 of the 97 registered MSBs have had their registrations revoked.

Ten MSBs registered to the Vancouver address also had their registrations revoked. A review of corporate registry documents for those companies reveals some of their directors share names with directors of companies in high-risk jurisdictions for money laundering, particularly Cyprus. Those companies did not respond to requests for comment.

Fintrac stipulates that registering does not mean a company is compliant. And German pointed out that Fintrac has neither the mandate nor the resources to vet every MSB.

“The reality is, Fintrac can only audit a small percentage of the number of entities that are registered to it. So the chances of really being audited in a significant way if you’re an MSB are pretty slim,” German said.

The IJF and CTV News obtained two confidential reports prepared by Fintrac for federal Finance Minister Chrystia Freeland via access to information law.

Those reports say many registered MSBs are not following the agency’s rules.

In the 2022-23 fiscal year, for example, Fintrac examined just 88 MSBs and found 84 per cent of them had “incomplete policies and procedures.” Two-thirds of them had “incomplete or absent risk assessments.”

Iuso said Fintrac’s work also became considerably harder in 2020, when the COVID-19 pandemic hampered the agency’s operations.

At the same time, Iuso said, Fintrac saw a sharp spike in the number of MSBs registering, in part because of a cryptocurrency investment boom. In 2020, 865 new MSBs registered with Fintrac, compared to 411 the previous year.

“The industry is finding it. Fintrac is finding it. But it’s like whack-a-mole,” Iuso said. “One address goes down, and another one comes up.”

‘Keeping bad actors out’

Caldera, the campaign director at Publish What You Pay, says the “clusters” of MSBs indicate many of these businesses are shell companies.

While legal to set up, Caldera says such companies serve to obfuscate who really owns or controls a company, or where it actually does business.

Caldera believes that Canada has become a hub for such companies because of its relatively low reporting requirements — though the federal government and some provinces have recently pledged to introduce new requirements for reporting a company’s beneficial ownership.

Some anti-money laundering experts think it’s time for change. Denis Meunier, a former deputy director of Fintrac, said the IJF and CTV’s findings suggest that company service providers should be subject to Canada’s anti-money laundering and terrorist financing laws, something the federal government has contemplated in the past.

“I think they should be covering company service providers, especially those that are registering multiple corporations at the same address,” Meunier said.

Freeland’s office told CTV News, that she was unavailable for an interview. Her office also declined to answer specific questions about potential legal reforms and instead listed other recent regulatory changes.

CTV News managed to track Minister Freeland down at an unrelated press event in Markham. When asked about some of the investigation’s finding, Freeland highlighted recent regulatory changes cracking down on activity like money laundering. While acknowledging the gaps in the current regime.

“We do have more work to do here in Canada, both in terms of ensuring we have the tools we need to crack down on fraud and money laundering and also that enforcement agencies across the country are doing their jobs,” Freeland said.

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British Columbia is already working on new provincial rules for MSBs — but it’s not clear when they’ll actually take effect.

In May 2023, the provincial government passed a law allowing it to introduce regulations for such businesses, one of the recommendations made after the 2022 Cullen report on money laundering in the province.

Those regulations would put MSBs under the purview of the B.C. Financial Services Authority, the same regulator that covers real estate professionals and mortgage brokers.

But so far, B.C. hasn’t released what those regulations will actually be.

In a prepared statement, B.C. finance minister Katrine Conroy said MSBs “play an important role in providing accessible financial services, including low-income households and migrants sending money to their families in their home countries.”

But she said the new regulatory regime would also include background checks, annual reporting and “investigative and enforcement powers to help protect people from unknowingly working with unregistered or criminally linked businesses.”

“We want to make sure they are available to those who need them while keeping bad actors out of the industry,” Conroy wrote.

Caldera said he supports recent regulatory changes, including new federal rules that require MSBs to provide criminal background checks for their directors.

But he says the country needs to do more — and get better at catching and punishing people who break the rules.

“We need to enforce the regime that we have,” Caldera said.