When the first wave of arrests came last Tuesday, many in the financial sector were stunned. The RCMP’s Integrated Market Enforcement Team had been quietly building their case against Canex Forex Ltd. for nearly two years. Now we know why.
Court documents filed in Ontario Superior Court reveal an elaborate $40 million money laundering operation allegedly orchestrated through one of Canada’s most established currency exchange businesses. Five executives face charges including fraud over $5,000, laundering proceeds of crime, and participation in a criminal organization.
“This wasn’t sophisticated tradecraft – it was hiding in plain sight,” said Crown prosecutor Elaine Mitchell during Wednesday’s bail hearing. “The volume of transactions was deliberately kept below reporting thresholds, creating thousands of separate exchanges that avoided triggering FINTRAC notifications.”
According to the RCMP, the scheme centered around a network of shell companies that would deposit large sums with Canex Forex before converting them to foreign currencies and transferring funds to accounts in Hong Kong, Cyprus, and Panama. The money would then return to Canada through seemingly legitimate business transactions.
I reviewed over 200 pages of court filings that detail how investigators believe the operation processed approximately $40 million between January 2020 and March 2024. The documents describe a carefully structured system where no single transaction exceeded $9,000 – just below the $10,000 threshold that would trigger mandatory reporting to Canada’s financial intelligence agency.
Former federal prosecutor Daniel Bernstein, now with the Canadian Anti-Money Laundering Institute, told me this case highlights significant vulnerabilities in our financial monitoring systems. “Currency exchanges operate in a regulatory gray zone with far less scrutiny than banks. They’ve become the path of least resistance for moving questionable funds.”
The investigation began after a Canex employee contacted authorities in September 2022. This whistleblower, identified in court documents only as “Confidential Informant A,” provided internal records showing patterns of structured transactions and client profiles that raised red flags.
“I noticed the same people coming in repeatedly, breaking up what were clearly large exchanges into smaller ones,” the informant stated in their affidavit. “When I brought this up to management, I was told to process the transactions without questions.”
The alleged scheme gained momentum during the pandemic when in-person banking became less accessible and digital transfers surged. Investigators believe Canex executives saw an opportunity amid the disruption and significantly expanded their illegal operations during this period.
Financial crimes specialist Priya Sharma from the University of Toronto’s Munk School of Global Affairs points to a troubling trend. “Money launderers adapt quickly to changing conditions. The pandemic created a perfect environment – reduced oversight, increased digital transactions, and economic distress that made many businesses more willing to participate in questionable arrangements.”
The court documents reveal how RCMP investigators used surveillance, financial analysis, and undercover operations to build their case. In one instance, an undercover officer approached Canex with a scenario suggesting they needed to move funds from a suspicious source. Recordings allegedly capture a senior Canex employee explaining how to structure the transactions to avoid detection.
The investigation also uncovered connections to several real estate developments in Vancouver and Toronto, where prosecutors allege laundered funds were invested in condominium projects. Property records show at least three developments received substantial financing from companies now linked to the Canex investigation.
“Following the money in these cases means looking at where it ultimately lands,” explained RCMP Financial Crimes Superintendent Marcia Greene. “Real estate has consistently been a preferred destination for laundered funds in Canada because property values tend to rise, legitimizing the origins of the money.”
For the financial sector, this case raises serious questions about regulatory oversight. Currency exchanges must register with FINTRAC, but critics argue the monitoring system relies too heavily on self-reporting. The Financial Consumer Agency of Canada conducted only 19 physical inspections of currency exchanges nationwide last year, according to their annual report.
David Macdonald, senior economist with the Canadian Centre for Policy Alternatives, believes more structural changes are needed. “Our anti-money laundering framework remains full of holes. When a company can allegedly move $40 million through the system without detection for years, that’s a systemic failure, not just a case of bad actors.”
The five defendants were released on strict bail conditions, including surrendered passports and prohibitions on working in financial services. Their preliminary hearing is scheduled for August 15th.
As this case unfolds, it serves as a reminder that Canada’s reputation as a safe, rule-based financial system makes it an attractive target for money laundering. The question now is whether this high-profile prosecution will lead to meaningful reforms or remain just another headline in the cycle of financial crime.
