Registering a Money Services Business under FINTRAC in Canada in 2023Salvus Team
As the world’s tenth-largest economy, Canada has established a resilient financial system that confidently survived the recent global financial crises. Anchored in this strong economic foundation, Canada features one of the most robust and dependable banking systems worldwide.
A pivotal element contributing to the banking system’s success is the Financial Transactions and Reports Analysis Centre (FINTRAC) of Canada. Tasked as the financial intelligence unit, FINTRAC is responsible for preventing and combating money laundering and terrorist financing. Consequently, Canadian businesses offering money services are mandated to register and operate under the supervision of FINTRAC.
Within the next sections the SALVUS Payments Services Licensing team discusses key aspects of registering a Money Services Business (MSB) under FINTRAC. Our article is divided into the following sections:
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1. Why register a Money Services Business under FINTRAC?
The rapid advancement in payment and money services in recent decades stems from the integration of innovative solutions and systems. Canada stands out among well-developed nations for its emphasis on innovation and the advancement of financial technology.
Businesses situated in Canada benefit from a taxation system that operates on a self-assessment basis and is fortified by multiple income tax treaties, with several member states of the European Union (EU) and the United States.
In addition, Canada maintains robust bilateral relations with the United States of America, offering investors the advantage of aligning with US economic policies.
To this extent, registering an MSB under FINTRAC requires a short period of time between the registration and the actual launch of operations. In this respect, FINTRAC applies no requirements with respect to the company’s authorised capital and the place of business.
Moreover, MSB entities registered under FINTRAC have the possibility to provide services in both fiat and crypto assets and onboard clients from other countries, without actively advertising their services in those countries.
2. Which are the MSB services?
An MSB license is required for natural and legal persons who have a place of business in Canada and are engaged in the business of providing any of the following services:
- Foreign exchange dealing – conducting transactions where you exchange one type of currency for another.
- Remitting funds or transmitting funds – by any means or through any person, entity, or electronic funds transfer network or any other method, including
- remitting or transmitting funds carried out by means of a credit/debit card where the beneficiary has an agreement with the payment service provider that permits payment by that means for the provision of goods and services.
- Issuing or redeeming money orders, traveller’s cheques or other similar negotiable instruments except for cheques payable to a named person or entity.
- Dealing in virtual currencies, including
- virtual currency exchange services such as funds for virtual currency, virtual currency for funds or virtual currency for another virtual currency.
- virtual currency transfer services such as transferring virtual currency at the request of a client or receiving a transfer of virtual currency for remittance to a beneficiary.
- Crowdfunding platform services – providing and maintaining a crowdfunding platform to be used by other persons or entities to raise funds or virtual currency.
3. MSB vs. FMSB
A person is required to register as an MSB under FINTRAC in case it intends to offer one or a combination of MSB services to the public and has a place of business in Canada. Having a place of business in Canada means that the person, legal or physical:
- is incorporated in Canada,
- has a physical location in Canada, or
- has employees, agents or branches in Canada.
On the contrary, a person is required to register as a Foreign MSB (FMSB) under FINTRAC, in case it intends to offer one or more MSB services and does not have a place of business in Canada.
4. What are the main registration requirements?
To be registered as an MSB, specific obligations are required to be fulfilled as per the Proceeds of Crime, Money Laundering and Terrorist Financing Act (PCMLFTA). The main registration requirements concern the following:
- Beneficiaries – information about the beneficiaries of the business shall be disclosed to FINTRAC including their citizenship, non-criminal certificates and source of wealth.
- Personnel – a compliance officer is required to be appointed at the registration stage, preferably with experience in the financial sector.
- Company Name – the name of the company shall be comprised of at least two words, one of which must describe the company’s main business.
- Office – the applicant is not required to maintain a physical office, at the registration stage, rather than a legal address.
- Initial Capital – no minimum initial capital requirement is applicable. Nonetheless, the amount of authorised capital that the applicant chooses to pay, shows to FINTRAC the intention for business planning and development.
5. How SALVUS can support your MSB registration
The SALVUS Payment Services Licensing team is composed of industry-leading professionals able to support you in every step of your MSB registration with FINTRAC. Our team employs a sophisticated project management approach, beginning with designing an effective portfolio of money services that suit your business plan and objectives. We work closely with our clients and their teams to ensure the preparation of a complete and well-supported application package, leading your interaction with the regulator.
We further assist you in recruiting all the necessary positions through a compilation of in-house personnel and outsourced arrangements. Finally, we ensure the fulfilment of all regulatory requirements for the successful launch of operations. Leveraging on our profound understanding of Canada’s financial regulations and substantial experience in the field we constitute a prominent choice for companies seeking to achieve regulatory compliance.
Contact us at email@example.com if you are interested in registering an MSB or FMSB under FINTRAC in Canada; our Payment Services Licensing team is ready to help you.
The information provided in this article is for general information purposes only. You should always seek professional advice suitable to your needs.