Canada MSB
Money Service Business
Crypto License

What a Canadian MSB license can offer you!

MSB is an abbreviation for Money Service Business.

MSB is a virtual currency exchange. Financial permission is used for supervising firms involved in exchange activities, including cross-border financial transfers, currency exchange, (including digital currencies/virtual currencies), ICO issuance, provision of prepaid goods, etc.

You are an MSB if you are in business in Canada to offer any of the following services to the public:

Virtual Currencies
Foreign exchange dealing – Exchange one type of currency for another (e.g., USD to EUR).
Money transferring – Transfer funds and execute cross border transfers for individuals and businesses alike.
Dealing in virtual currencies – Offer virtual currency exchange and virtual currency transfer services.
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.

No capital requirement, no annual registration fees.

Dealing in virtual currency

This includes both virtual currency exchange and virtual currency transfer services.

Virtual currency exchange services include exchanging:
– funds for virtual currency;
– virtual currency for funds; or
– virtual currency for another virtual currency.

Virtual currency transfer services include:
– transferring virtual currency at the request of a client; or
– receiving a transfer of virtual currency for remittance to a beneficiary.

You are also considered an MSB if:
– You hold a permit or license related to any of the above-mentioned services.
– You are registered as someone offering any of the above-mentioned services.
– You advertise by any means, that you engage in any of the above-mentioned services.
– You do not advertise any MSB services, but you:
– offer money transfer services in any amount;
– conduct foreign exchange transactions for more than $1,000 during a single transaction with the same person or entity. For these purposes, a single transaction is defined as two or more transactions related to a foreign exchange transaction of less than $1,000 each that are made within 24 consecutive hours and that total $1,000 or more; or
– issue or redeem money orders, traveler’s cheques or other similar negotiable instruments for more than $1,000 during a single transaction with the same person or entity. For these purposes, a single transaction is defined as two or more transactions related to the redemption of money orders, travelers’ cheques or other similar negotiable instruments of less than $1,000 each that are made within 24 consecutive hours and that total $1,000 or more.
– You report the income of any of the above-mentioned services as income from a separate business for tax purposes.

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.

Compliance program
Know your client
Reporting
Record keeping

Foreign exchange dealing

Conducting transactions where you exchange one type of currency for another (for example, exchanging USD for CAD).
However, purchases made with foreign currency are not considered foreign transactions.

Money transferring

Transferring funds from one person or entity to another using an electronic funds transfer network or any other method.

Issuing or redeeming money orders, traveler’s cheques or anything similar

Your business issues or redeems money orders, travelers’ cheques or other similar negotiable instruments. This does not include cashing cheques made out to a particular person or entity.

Please consider:

Issuing – To offer your own business’s money orders or travelers cheques.

Redeeming – To repurchase your own business’s money orders or traveler’s cheques by returning the purchase price to the buyer.

Selling or Cashing – To exclusively sell or cash the money orders or traveler’s cheques of another business that issued the money order or traveler’s cheque, does not make you an MSB.

Register your MSB

Before beginning to operate in Canada, you must register your MSB with FINTRAC. Even if you are registered as an MSB with a province or territory, you still have to register with FINTRAC.

Note: On June 1, 2021, regulatory amendments, which changed obligations for all reporting entities (REs) subject to the PCMLTFA and associated Regulations, will come into force. FINTRAC expects that REs will comply with the amended Regulations but will exercise flexibility in assessing and enforcing compliance with certain record keeping and reporting requirements.

Canada as a domicile

Canada is a business-friendly jurisdiction that has a wide array of fintech businesses at all stages of growth, operating throughout the country. As a reputable country, Canada is underpinned by the consistently high standards of financial regulation that allow well-managed risk-taking and innovation. This jurisdiction remains one of the most welcoming and profitable places in the world for international businesses and foreign investors.

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 5 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 purposes

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 we advise declaring at least 5 000 CAD.

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, TBA & Associates can provide compliance officer services in order to meet the requirements.

Want to get licensed in Canada as a Money Services Business?

We can assist you with all required services:

– Assessing qualifications for applicants applying for / renewing the Money Services Business (“MSB”) registration
– Forming a Canadian company
– Bank account opening (operational and transactional)
– AML risk assessment
– AML & CFT program
– Compliance officer recruiting
– Resident non-executive director or agent for service
– AML function outsourcing

Legal and Project Services

Project management
Corporate concierge
Resident non-executive director
Compliance support
Compliance programme
Risk assessment
Clear banking
Compliance officer recruitment

Timeline

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

Our Business Development Team will draft the business plan and AML/CFT policy within 2 weeks.

Thereafter, we will submit the license application to FINTRAC and attain the license within 4 weeks.

Once the license is attained, TBA & Associates’ banking team will work on corporate bank account opening immediately.

On average, the engagement will be completed within 2 to 3 months.

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.

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.