Canada MSB License
Money Service Business

Trading in Virtual Currency

When launching your fintech project and offering Virtual Currency Trading or Payment Services, it is imperative to obtain the necessary authorization. Among the various options available for registering your Virtual Currency Trade and commencing operations promptly, the Canadian Money Services Business (MSB) license stands out as a cost-effective and multi-alternative providing you several advantages.

Securing a Crypto or VASP license in any European Union (EU) country or in the United Kingdom can be an extensive and costly endeavor. The process, from the initial stages to the actual launch, often goes over a 6 months’ timeframe, considering preparing the required documentation, obtaining authorization from regulatory bodies, and setting up the basic infrastructure adds. This arduous process often compels new companies to seek alternative pathways to kickstart their fintech ventures more swiftly. That’s why MSB license in Canada still remains as an excellent option, inclusive for its short time frame 2 to 3 months to get registered with FINTRAC.

What a Canadian MSB License Can Offer You

Canada presents an attractive jurisdiction for several reasons, including its government’s flexible requirements for financial services companies, adherence to global regulatory standards, and a robust legal framework that ensures a high level of legal protection.

Canada boasts one of the world’s most reliable banking systems, having weathered the global financial crisis. It currently stands as the ninth-largest economy globally and fulfills all essential criteria, encompassing property rights, technology, innovation, taxation, corruption levels, securities market stability, bureaucracy, and investor protection.

Financial businesses catering to customers must align with Canadian laws to support government efforts in detecting criminal activity and combating money laundering. There are two categories of financial businesses obliged to comply with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) regulations in Canada: the Foreign Money Service Business (FMSB) and the Money Service Business (MSB).

TBA & Associates provides professional assistance in obtaining a Canadian MSB license through a comprehensive turnkey solution, backed by a guarantee.

Services Offered by an MSB
(Money Services Business)

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.

You are a money services business (MSB) if all of the following criteria apply:

1. You offer at least one money services business (MSB) service
2. You have a place of business in Canada

Latest MSB activities permitted by FINTRAC

Dealing in virtual currencies

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.

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.

Foreign exchange dealing

Conducting transactions where you exchange one type of currency for another (for example, exchanging USD for CAD).

Money transferring

Transferring funds from one individual or organization to another using an electronic funds transfer network or any other method such as Hawala, Hundi, Fei ch’ien, and Chitti

Merchant acquiring

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

Crowdfunding platform

Crowdfunding platform services include the provision and maintenance of a crowdfunding platform for use by other persons or entities to raise funds or virtual currency for themselves or for persons or entities specified by them.

Payment service provider

Includes enabling the transfer of funds carried out as payment for the provision of goods and services, such as by debit, credit card, or a prepaid payment product.

For further information about:

• Financial activities you can legally carry out under the MSB license in Canada;
• Requirements for MSB application;
• How to register and run the Money Services Business.

Please visit our website related page here .

Canada’s MSB License
Key Benefits and Advantages

The primary Advantages and Benefits of acquiring an MSB License in Canada

Canada is recognized as one of the world's most stable economies, boasting a diverse range of fintech companies thriving within a regulatory environment conducive to business. With stringent financial regulations, a culture of ongoing innovation, and a plethora of sales avenues, Canadian enterprises embody excellence in the financial sector.

Outlined below are the primary advantages and benefits of acquiring MSB
licenses in Canada:

Ensuring Legal Compliance

Every financial service organization operating in Canada must secure an MSB license to operate within the bounds of the law. Obtaining these licenses guarantees legal operation, ensuring adherence to regulatory standards and
compliance with applicable laws.

No Capital Deposit Required

In contrast to licensing requirements in other jurisdictions, the Canadian MSB licensing process doesn't necessitate a minimum authorized capital. Typically, the process involves company registration, appointing an anti-money laundering officer, and selecting a director.

No Mandatory Physical Establishment or Staff

Similarly, unlike some other jurisdictions, there's no obligation for a physical business location or staff members (except for a compliance officer).

Offering Fiat and Crypto Services

The Canadian MSB license permits the provision of services in both traditional fiat currency and cryptocurrencies. This stands in contrast to Europe, where separate licenses are typically required for fiat and cryptocurrency transactions.

Enhanced Credibility in Financial Partnerships

Establishing partnerships with banks, payment processors, and networks is crucial in the financial landscape. Holding an MSB license enhances credibility, facilitating smoother negotiations and collaborations with these entities. It
demonstrates a commitment to regulatory compliance and financial stability, making the licensed entity a more desirable partner.

Efficient Licensing Process

Compared to European counterparts, the MSB licensing process in Canada is relatively expedient. The timeframe typically ranges from two to five months, depending on document submission. This efficiency is further underscored by the quick registration process with the BC registrar (1-2 days) and approval from FINTRAC (1-2 weeks).

Reputation for Reliability

Canada financial sector is esteemed for its safety, stability, and reliability, thanks to robust banking institutions. This solid foundation, coupled with ongoing innovation, fosters a secure and trustworthy business environment.

Versatility

The MSB license in Canada enables license holders to engage in various services, including foreign exchange transactions, fund remittance, money order issuance, virtual currency trading, and crowdfunding facilitation. This versatility appeals to business owners, offering flexibility for diverse strategies and attracting potential investors.

Facilitating International Expansion

Securing an MSB license signifies compliance with Canadian regulations, streamlining international business expansion efforts by bolstering credibility and legal standing.

Registering your MSB Entity

Before commencing operations in Canada, it is essential to register your Money Services Business (MSB) with FINTRAC. Even if your MSB is registered at the provincial or territorial level, you must also register with FINTRAC.

Please note: As of June 1, 2021, regulatory amendments affecting all Reporting Entities (REs) subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its associated Regulations will be in force. While FINTRAC expects REs to comply with the amended Regulations, there will be flexibility in assessing and enforcing compliance regarding certain record-keeping and reporting requirements.

Registration Steps

Step 1
When establishing a company in Canada, you may select any province, with British Columbia being a suitable choice for non-residents. Here are some key requirements:

• Personnel: During the registration phase, it is necessary to appoint a Compliance Officer, preferably with prior experience in the financial sector.
• Beneficiaries: Details regarding the beneficiaries of the business, including information on their citizenship, non-criminal records, the source of their wealth, or any other requisite criteria.
• Company Name: It should consist of at least two words, with one describing the company’s primary business, such as “payments” or “money transfers.” Abbreviations are not accepted.
• Registered Address: At the registration phase, having a physical office is not obligatory. What the company needs is a legal address, which can be, for instance, the residential address of the director. In the majority of instances, it is advisable to opt for federal incorporation rather than provincial.
• Initial Capital: FINTRAC has not established a specific minimum requirement for initial capital. However, it is recommended to deposit and commit a certain amount as authorized capital to demonstrate a genuine commitment to business planning and development.
• Management: During the registration stage, appoint at least one director with experience in the financial sector.
• Compliance Reporting: A company registered with FINTRAC must complete reports, including information about suspicious transactions, electronic fund transfers exceeding specific limits, large cash transactions exceeding specific limits, and terrorist property, as part of their internal compliance program.

(Note: If needed, TBA & Associates can offer compliance officer services to meet the requirements.)

Step 2
This step includes an interview with a FINTRAC representative. You need to provide:

• The company name seeking the license.
• The legal (actual) address of the company
• Contact details of the company representative.
• A description of the services and activities the company intends to provide.

Step 3
For registration, you should submit the following information:

• Details about your Compliance Officer.
• Staff headcount.
• Registration information (if your business is a corporation).
• Information about the owners of your MSB and senior management, including their names and dates of birth (for the company directors and individuals who own or control 20% or more).
• An estimate of the expected total annual transaction amount in U.S. dollars for each MSB service you offer.
• Detailed information about each branch.
• Details about each MSB agent.

Should you wish to establish a Money Services Business in Canada, TBA can provide comprehensive support, including assessing applicant qualifications, company formation, bank account setup, AML risk assessment, compliance officer recruitment, and more. We also offer legal and project services, project management, corporate concierge services, resident non-executive directors, compliance support, and more.

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

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.

Timeline

The MSB licensing process in Canada is relatively expedient. The timeframe typically ranges from 2 to 3 months, approximately, depending on document submission. This efficiency is further underscored by the quick registration
process with the BC registrar (1-2 days) and approval from FINTRAC (1-2 weeks).

How TBA Can Help You!

Established in 2009, TBA Associates boasts a dedicated business development team specializing in tailor-made wealth preservation and enhancement solutions. This expert team delivers tax-efficient structures to facilitate cross-border transactions.

The knowledgeable professionals at TBA Associates will guide you in making informed decisions while providing continuous support throughout the process. They can assist you in devising and executing strategies that enable you to manage your financial affairs with absolute confidentiality in an environment free from adverse tax implications.

Should you have any question or related matter you may need to discuss or clarify, do not hesitate to contact us.

Our Business Team will be more than happy and pleased to provide you free assistance, to assist you to properly reach your professional goals.