Fraud Prevention Month Series
Fraud in Canada: An Ongoing Series for Payment Businesses
March is Fraud Prevention Month in Canada — a reminder that fraud doesn’t just affect individuals, it threatens the businesses and financial infrastructure Canadians rely on every day. We’ve been running an ongoing series spotlighting the fraud trends most relevant to payment service providers, money services businesses, and the merchants we work with.
More in this series
Servicing vulnerable populations in financial services, especially crypto-related transactions, requires careful navigation to mitigate risks of exploitation and fraud. Vulnerable individuals — often including the elderly, low-income earners, immigrants, or those with disabilities — may lack financial literacy or face barriers to traditional banking, making them prime targets for scams. These aren’t abstract categories: they represent real people who may be entering the crypto space without a financial advisor, without a safety net, and without a clear understanding of what they’re getting into.
Identifying vulnerability involves assessing a combination of factors: age, income, education level, digital literacy, and access to professional financial guidance. Vulnerability is not always obvious. A recently widowed senior, a newcomer unfamiliar with Canadian financial norms, or a low-income earner chasing outsized returns can each present differently — but all face heightened exposure to harm.
🇨🇦 Canada’s Crypto Landscape
In Canada, approximately 10% of the population owns Bitcoin, according to the Bank of Canada’s Bitcoin Omnibus Survey (2023). Adoption remains largely investor-driven, concentrated among younger, higher-income individuals. But as crypto becomes more accessible through mainstream apps and ATMs, a broader and more vulnerable population is increasingly entering the space — often without adequate guidance. According to the OSC’s Crypto Asset Study, 74% of Canadian crypto owners were never recommended crypto by a financial advisor and most never even discussed it with one. That gap between access and education is precisely where exploitation takes hold.
Crypto transactions amplify the dangers that already exist in traditional finance. High leverage in DeFi lending can wipe out positions in minutes. Stablecoin de-pegging events can eliminate savings that users believed were protected. Cyber threats — from phishing to wallet compromise — are persistent and evolving. For users who don’t fully understand these mechanisms, the consequences can be severe and irreversible.
⚠️ Spotlight: Pig Butchering Fraud
Fraudsters exploit the crypto environment aggressively. One of the most damaging schemes is Pig Butchering, in which criminals build trust with victims over weeks or months through fake online relationships before luring them into fraudulent crypto investment platforms. The victim is shown fabricated returns, encouraged to deposit more funds, and ultimately left with nothing.
According to blockchain security firm Cyvers, pig butchering schemes caused losses exceeding $5.5 billion across approximately 200,000 identified cases in 2024 alone — with 75% of victims losing more than half of their net worth. These are not isolated incidents. They are the systematic destruction of life savings, often targeting people who could least afford to lose them.
The risks for service providers are equally real. Any provider whose platform facilitates a fraudulent transaction — knowingly or not — can find itself entangled in a fraudulent chain, exposed to regulatory penalties, and facing lasting reputational harm.
📋 Regulatory Obligations: FINTRAC
FINTRAC, Canada’s financial intelligence unit, requires enhanced due diligence for high-risk clients under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). Criminal non-compliance penalties can reach up to $2 million and/or five years imprisonment. On the administrative side, FINTRAC issued penalties totalling over $18 million across various entities in 2024 alone, and the regulatory trajectory is toward significantly higher penalties going forward.
In the crypto space specifically, illicit actors routinely abuse DeFi protocols to layer and launder proceeds, while poor cybersecurity practices create entry points for theft. Providers who underinvest in security controls are not just exposing themselves — they are exposing their users.
Best Practices for Responsibly Serving Vulnerable Populations
Best practices begin with thorough Know Your Customer (KYC) processes and enhanced due diligence for clients who exhibit signs of heightened risk. Providers should also offer clear, plain-language risk disclosures that explain volatility, the irreversibility of blockchain transactions, and the hallmarks of common scam typologies — not buried in fine print, but front and centre where users will actually see them. Beyond compliance, offering educational resources — whether through onboarding materials, links to verified third-party guides, or direct outreach — reflects a genuine commitment to user welfare rather than simply ticking regulatory boxes.
Technology plays a critical supporting role. Automated transaction monitoring calibrated to detect behavioural red flags — sudden large deposits inconsistent with a client’s profile, rapid external transfers following account opening, or patterns suggesting a third party is directing activity — can surface potential fraud before it becomes a loss.
Apaylo’s stance is clear: any transaction deemed fraudulent involving vulnerable users will be returned, with merchants seeking recourse from end-users. This is not simply a policy position, it is a reflection of the ethical obligation that every participant in the payments ecosystem carries.
Cyber risks in finance are not diminishing. AI-driven fraud — including deepfake impersonation and automated social engineering at scale — is making scams harder to detect and easier to deploy at volume. The response must be equally serious: robust technical controls, trained compliance teams, ongoing monitoring, and a culture that treats the protection of vulnerable users as a core business priority, not an afterthought.
By prioritizing ethics alongside efficiency, Apaylo helps its merchant partners serve their customers responsibly, build durable trust, and operate within a regulatory environment that is only becoming more demanding. Protecting vulnerable populations is not in tension with good business. It is the foundation of it.
