Money Services Business registration in Canada (MSB, FMSB)

If you are looking to register a Money services business (MSB) or Foreign Money Services Business (FMSB) in Canada, Advapay can offer you its legal, technical and business expertise and consulting support.

Overview of Money Services business (MSB) and Foreign Money Services business (FMSB)

Money services businesses (MSBs):

1) Offer one or more of the following services to the public:
– Foreign exchange dealing
– Remitting or transmitting funds
– Issuing or redeeming money order or similar negotiable instruments
– Dealing in virtual currency
– Crowdfunding platform services

2) Have a place of business in Canada
– Are incorporated in Canada;
– Have a physical location in Canada; or,
– Have employees, agents or branches in Canada.

Foreign money services businesses (FMSBs):

1) Offer one or more of the following services to the public:
– Foreign exchange dealing
– Remitting or transmitting funds
– Issuing or redeeming money order or similar negotiable instruments
– Dealing in virtual currency
– Crowdfunding platform services

2) DO NOT have a place of business in Canada:
– Are not incorporated in Canada;
– Do not have a physical location in Canada; or,
– Do not have employees, agents or branches in Canada.

3) Direct services at persons or entities in Canada.

4) Provide these services to clients in Canada.

Main services

MSBs and FMSBs can offer any of the following services to the public:

1) Foreign exchange dealing

2) Remitting or transmitting funds

3) Issuing or redeeming money order or similar negotiable instruments

4) Dealing in virtual currency

5) Crowdfunding platform services

Regulator and legislation

To conduct Money services business, the company must be registered with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). FMSBs and MSBs must comply with the full requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is Canada’s financial intelligence unit (FIU). The Centre assists in the detection, prevention and deterrence of money laundering and the financing of terrorist activities. FINTRAC was established by, and operates within the ambit of, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its Regulations. The Centre is one of several domestic partners in Canada’s anti-money laundering and anti-terrorist financing (AML/ATF) regime, which is led by the Department of Finance.

Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) facilitates combatting the laundering of proceeds of crime and combatting the financing of terrorist activities, establishes the Financial Transactions and Reports Analysis Centre of Canada and amends and repeals certain Acts in consequence.

Register for our online webinar “Two ways to start your fintech business fast”

Online webinar: Two ways to start your payment business fast (MSB and SPI)          

Main requirements

Personnel
At the registration stage, a Compliance Officer should be appointed – preferable with experience in the financial sector.

Name of the company
The name of the business should contain at least two words, one of which must describe the company’s main business, ex. “payments”, “money transfers”, etc. The abbreviations are not accepted.

Beneficiaries
Information about beneficiaries of the business – citizenship information, non-criminal certificates, source of wealth or other requirements.‎

Initial Capital
FINTRAC has not set a minimum initial capital. It is advisable to deposit and pay a certain amount of the authorised capital to show the seriousness of intention for business planning and development.

Office
Having an office at the registration stage is not required. The company must have a legal address, which can be, for example, the director’s home address. In most cases, it’s recommended to incorporate the company federally, instead of provincially.

More information about an MSB company and the licence you can find in the article below:

Canadian MSB – an affordable alternative to European EMI licence

Application and authorisation process

Fees
There are no fees associated to the registration process with the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”).

Application registration process
The registration can be completed online.

Registration timeframe
– Pre-registration process: 5 business days.
– Registration Process: 1-2 months.

The procedure of obtaining a permission to perform Money services

Step 1 – Incorporating a company in Canada.

Step 2 – Completing FINTRAC pre-registration form and receiving access to the online MSB registration system.

Step 3 – Submitting the registration form and required documents.

Documents and information submitted

1) Name of the company that is going to obtain the license;

2) Legal (actual) address of the company;

3) Contact details of the company representative;

4) Description of the services and activities the company plans to provide.

5) Information about the company’s bank account;

6) Information about your Compliance Officer;

7) Staff headcount;

8) Registration information (if your business is a corporation);

9) Information about the owners of your MSB and senior management – for example, their name and date of birth (about the company directors and each person who owns or controls 20% or more);

10) Estimate of the expected total amount of transactions per year for each MSB ser-vice you provide;

11) Detailed information about each branch;

12) Details about each MSB agent.

!! FINTRAC tends to send clarification requests with regards to any piece of the information that the applicant provides in order to confirm that the company is eligible to receive MSB registration. This may also include:

– a business plan with the detailed description of the services that justifies the need of the registration.
– an interview with the compliance officer or contact person appointed for the application.

Please read this article to learn more about Canadian MSB and EEA/UK-based E-money or Payment Institution main similarities and differences.