Canadian MSB License
An alternative to
European EMI license

Canada MSB – An alternative to EU EMI license

Canada
Money Service Business License

The establishment of an MSB in Canada requires acquiring a specific license from FINTRAC, a regulatory authority of the country regulating a Canadian financial market. In this overview, we gathered the main points regarding money service businesses: authorizations, requirements, the specter of regulation, and due diligence obligations.

Canada
Setting up your Fintech project

To launch your fintech project and provide payment services you need permission or authorisation to perform these operations.

Canadian Money Services Business (MSB) license is one of the several options you can decide for, to register your payment business and start operating immediately.

Obtaining an EMI license in any of the EU countries or in the UK is a very long and expensive process; it can take over 12 up to 18 months. At least you will need 3 to 4 months to prepare documents, 9 to 12 months to get authorisation from the regulator, 4 to 6 months to actually launch your basic fintech infrastructure. Reason why new entrepreneurs are usually forced to look for alternative options to start a fintech company – faster than obtaining an authorised PI or EMI license.

There are several options, including to operate as an agent under the umbrella of a licensed provider, to register as a small payment institution or, as a 3rd option, applying for a Canadian Money Services Business (MSB) license.

What is a Canadian MSB license?

This is a registration in a special register of businesses providing payment services, which is maintained by the Canadian regulator, the Financial Transactions and Reports Analysis Centre of Canada – FINTRAC, Canada’s financial intelligence unit (FIU). The Centre assists in the detection, prevention and deterrence of money laundering and the financing of terrorist activities.

Money Services Business (MSBs) must fulfil specific obligations as required by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations, to help combat money laundering and terrorist activity financing in Canada.

What a Canadian MSB license can offer you!

MSB is a non-bank financial institution that allows carrying out the following types of financial activities:

If you work in the money services business (MSB), you need to know about all the obligations that apply to you. This includes the registration of your business, reporting, record maintenance, knowing your customers and having a compliance program.

Currency Exchange

Conducting transactions in which you exchange one type of currency for another (for example, exchanging USD to EUR the Canadian dollar).

Money transferring

Money transfer from one individual or legal entity to another using the electronic money transfer network or any other method. Transfer funds and execute cross border transfers for individuals and businesses alike. Issue or redemption of money orders, traveler’s checks or other similar negotiable instruments.

Account Issuance

Create personalised e-wallets, allowing your customer to store the funds or deposit them directly to a bank account linked with the customers e-wallet.

Merchant acquiring

Enable your clients to accept card payments via a POS terminal or an online payment gateway page.

Trading in Virtual Currency

Dealing in virtual currencies – Offer virtual currency exchange and virtual currency transfer services.

It includes virtual currency exchange and transfer services. The virtual currency exchange services include the exchange of:

– cash funds for virtual currency;
– virtual currency for cash funds;
– virtual currency for another virtual currency.

The services on transferring virtual currency as a payment instrument include:

– virtual currency transfer (sending) at the client’s request;
– receipt of the virtual currency transfer for transferring to the recipient.

The new legislation in Canada, which came into force in early June 2020, has opened the green light for crypto-exchanges, as well as for payment operators dealing with crypto-currencies. Now, these organizations are officially classified as the financial service providers.

No capital requirement, no annual registration fees.

If you work in the money services business (MSB), you need to know about all the obligations that apply to you. This includes the registration of your business, reporting, record maintenance, knowing your customers and having a compliance program.

Benefits of MSB license in Canada

Benefits of MSB license in Canada

MSB Canada does not require a cash deposit

Among the requirements for obtaining an MSB license in Canada there are no special amount for Authorized capital. This is a huge benefit compared to EMI licenses in some EU countries where the capital of your company must be 350 000 euros.

Canada’s financial and banking system

Canada’s financial and banking system is considered one of the most reliable in the world and it has one of the best environments for business as itself. Canada now has the 9th largest economy in the world and is considered one of the best places to start a business with an environment and tax system that is in place for healthy and stable business growth and development. The payment systems in Canada, as well as the banks, play an important role in the financial sector. The government of Canada set fairly loyal requirements for the companies intending to provide financial services, thereby attracting not only local citizens but also foreigners in the development of the financial sector. These are the main reasons why you should obtain the MSB (money service business) license in Canada.

Faster than other licenses

The process of obtaining the MSB license in Canada may take from 2 to 3 months. This is quite fast compared to another financial licenses you can get in Europe. For example, the service time for obtaining an EMI-license in some European country is usually from 6 month till 1 year. The time you will spend on bureaucracy, you can use for developing your business instead. This is another compelling reason why you should obtain MSB license in Canada.

Requirements for MSB application

Company name – must contain at least two words, one of them should describe the main business activity of the company, for example, “payments”, “remittance” etc. Abbreviations are not accepted.

Registered address – for companies managed and owned by a non-resident of Canada the most convenient province for company formation in British Columbia with a commercial address in Vancouver.

Capital – minimum capital is not determined by the supervising authority, but it is advisable to deposit and pay a certain amount of the authorized capital in order to show the regulator the seriousness of intentions for business planning and development.

Management – at least one director private person with experience in the financial sphere has to be appointed at the stage of incorporation, and a qualified compliance officer as well as a sound AML/CFT program and compliance system should be appointed and in place at the stage of starting operational activity of the company. Directors and AML responsible people do not have to be local if the company is registered in British Colombia or Ontario.

Compliance reporting – a company registered with FINTRAC has to complete reports about certain types of transactions according to the developed internal compliance program, reports include information about suspicious transactions, electronic fund transfer reaching specific limits, large cash transactions reaching specific limits, terrorist property.

Ownership – at least one person (legal or private).

Note – If required, we can provide compliance officer services in order to meet the requirements.

How to register and run the Money Services Business (MSB)?
Time Scale

Stage 1

Client Due Diligence
Gathering basic information; providing a preliminary set of documents for further execution; clarity on project scope and budgets.

Expected Time scale – up to 2 weeks
Inclusions

Preliminary project analysis
KYC collection and business description
AML/CTF policy preparation

TBA will complete your Canada company registration within 1 week after receiving required documents.

Stage 2

Registering a business in Canada
You can choose any province to set up a company. For non-residents, British Columbia is the most suitable option.
Company registered under the approved name and its legal address.

Expected Time scale – 4 to 6 weeks
Inclusions

Choose company name
Rent an office and sign an agreement
Determine share capital
Prepare a set of notarised corporate documents
Appoint employees with financial expertise

Stage 3

Opening a bank account
A corporate account is opened, and the entity complies with the requirements of the tax authorities.

Expected Time scale – 4 to 5 weeks
Inclusions

Preparation of notarized documents
Preliminary talks with the payment institution and the account opening process
Payment of share capital

Stage 4

Pre-application work and registration
Submitting documents for an MSB license. A functioning company in the legal framework of Canada.

Expected Time scale – up to 2 weeks
Inclusions

Preparing and adapting documents for AML/CTF cryptocurrency company operations
Search, employment, training, and adaptation of employees
Submission of license application
Collecting additional documentation as requested by the FinTRAC representative
Negotiating with FinTRAC representative
Compliance with FinTRAC representative requirements

Stage 5

Registration process (unless a clarification request was sent to the applicant following the submission).
Obtaining an MSB license and the appearance of the company in the registry of licenses.

Expected Time scale – up to 4 weeks
Inclusions

Submitting the documents to FINTRAC
Leading the Client and conducting negotiations with the regulator and full support during the entire process until the registration is accomplished

Our Services

Project management
This service assures our support and guidance throughout the process of obtaining your MSB registration approval, including the setup of a new company in Canada in any of the 10 Canadian provinces, except Quebec (which requires a separate and distinct registration with the AMF). A member of the Pay Compliance team will be present at the FINTRAC interview and help guide you through the process. One of the main advantages to acquiring a Canadian MSB license is the short licensing process (3-4 months).

Corporate concierge
From corporate changes to certifications to authorisations to reports – we will deal with every local requirement for you, so that you can focus on the operations.

Compliance support
We will provide a full compliance support to you including design/upgrade of policies, procedures, questionnaires, and forms to meet regulatory requirements; support client on-boarding, AML and KYC checks; liaise with regulators during regulatory examinations, investigations, and post examination remediation; Ad hoc compliance advice, regular compliance reviews, personalised one-to-one training, handling of all correspondence and statutory filings with regulators.

Compliance programme
o comply with the Canadian regulation, a compliance program must be put in place for your company, which will be reviewed by FINTRAC. We can offer a written AML/CFT compliance program that meets Canadian and international standards customised for your business operations.

Risk assessment
We will prepare your risk assessment by considering elements of your business, clients and/or business relationships to identify the impact of possible ML/TF risks, and to apply controls and measures to mitigate these risks.

Clear banking
We will prepare your risk assessment by considering elements of your business, clients and/or business relationships to identify the impact of possible ML/TF risks, and to apply controls and measures to mitigate these risks.

Compliance officer recruitment
As all companies require a Compliance Officer, we will offer support in connecting clients with qualified and experienced candidates who will be equipped with the necessary knowledge about the Act and its associated regulations to ensure that your business remains compliant.
Canada MSB – Alternative to EU EMI License

Next steps

If you are interested in setting up a Canada MSB business, kindly call or email us.

We shall be pleased and ready to guide and assist you, answering all your questions and matters you may need to clarify.

Should you have any question or matter
You would like to discuss or clarify with us

Or

Should you like to receive further Information
About our services and fees,…

Our multi-lingual team of business advisors is happy to assist you with all upcoming questions and issues in relation to your application.

You may call or email us, and we will be happy to assist you in a fast and efficient manner.

You can also come and visit our offices to discuss issues face to face if you prefer. Just arrange an appointment and we will be happy to meet with you.


Licensing Services
Our Company Services
Services we DO and Services we DO NOT DO

Our company is EXCLUSIVELY engaged in assisting worldwide clients, either individuals or corporate entities, to get duly and properly registered and licensed with local Regulators and Financial Authorities to get respective official licenses to legally carry out their cryptocurrency business activities.

TBA & Associates Tax Business Advisors does not carry out any sort of Cryptocurrency Business Trade