Canada MSB Crypto License
Set up your Crypto company in Canada

Under the regulations of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), companies that provide cryptocurrency exchange or cryptocurrency transfer services are required to register as a Money Services Business (MSB) with FINTRAC and comply with FINTRAC reporting requirements.

Benefits of MSB license in Canada

Reputable jurisdiction
Canada is an extremely reputable jurisdiction, while allowing you to market yourself as a Regulated Crypto Business.

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.

Highly regarded Crypto solution
Canada is a highly regarded solution for crypto investment companies.

Faster than other licenses
The process of obtaining the MSB license in Canada may take from 3 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.

MSB license in Canada
Activities you can carry out

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:

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

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.

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.

Canada MSB
Requirements to set up an MSB License in Canada

Since a cryptocurrency company in Canada must register as a Money Services Business (MSB), it must meet the requirements of an MSB.

Compliance program

A comprehensive and effective compliance program is the basis of meeting all of your obligations under the PCMLTFA and associated Regulations. During a FINTRAC examination, it is important to demonstrate that the required documentation is in place and that employees, agents, and all others authorized to act on your behalf are well trained and can effectively implement all the elements of your compliance program. A senior officer must approve the compliance program and the compliance officer must have the necessary authority to carry out the requirements of the program.
You must:

• Appoint a compliance officer responsible for the implementation and oversight of the compliance program;
• Develop and apply written compliance policies and procedures that are kept up to date and approved by a senior officer;
• Apply and document a risk assessment , including mitigation measures and strategies;
• Develop and maintain a written training program for employees, agents, and others authorized to act on your behalf;
• Review your compliance program (policies and procedures, risk assessment and training program) every two years for the purpose of testing its effectiveness.

Know your client

As a money services business, you must verify the identity of clients for certain activities and transactions according to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR). Part of knowing your client includes following the methods to identify clients, as well as conducting certain additional and related activities.

Reporting

Money services businesses are required to complete reports about certain transactions and property and submit them to FINTRAC. Financial transaction reports are critical to FINTRAC’s ability to analyse transactions in order to develop financial intelligence that is disclosed to law enforcement and partner agencies. Therefore, the quality of your reporting will be reviewed by FINTRAC in examinations.

• Suspicious transactions;
• Terrorist property;
• Large cash transactions;
• Electronic funds transfers;
• Money services businesses must take additional steps to determine whether a client or recipient of an electronic funds transfer of $100,000 or more is a politically exposed person and take steps to establish the source of funds when a politically exposed person is involved in the transaction.

You must submit all reports to FINTRAC electronically, except Terrorist Property reports, which can only be submitted on paper.

Record keeping

You are responsible for keeping certain transaction and client identification records. These records are to be kept in such a way that they can be provided to FINTRAC within 30 days if required to do so.
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, person responsible for AML/CTF should be appointed at the stage of starting operational activity of the company. Directors and AML responsible people do not have to be local.
• 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).

TBA & Associates Services

We will 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.

Expected Timeframe

TBA & Associates 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, Atrium Legal Lab banking team will work on corporate bank account opening immediately . The new requirements flow from several important changes to the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the “Act”), which came into force on June 1, 2021 (the “Amendments”). The breadth of activities that may be caught by the Amendments is wide, and non-compliance can result in significant monetary penalties.

Our Fintech Practice

Our lawyers and financial services specialists at TBA & ASSOCIATES provide solutions to clients by combining the traditional legal fabric with new technologies.
If you would like more information as to how to apply for digital currency license, setting up of an ICO, a cryptocurrency exchange, we welcome you to get in touch with our Busindess Development Team, who will provide you promptly and efficient support and assistance to your project.