In today’s complex financial landscape, businesses that offer money services in Canada must navigate a comprehensive regulatory framework designed to combat money laundering and terrorist financing. At the heart of this framework is the Money Services Business (MSB) licensing system overseen by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
This guide provides a thorough overview of the Canadian MSB license requirements, registration process, compliance obligations, and best practices for maintaining good standing with FINTRAC. Whether you’re a startup fintech company, a currency exchange service, or an established financial institution expanding your offerings, understanding the MSB licensing process is essential for legal operation in Canada.
What is a Money Services Business (MSB) in Canada?
According to FINTRAC’s official guidelines, a Money Services Business in Canada is defined as a person or entity engaged in the business of providing at least one of the following services:
- Foreign exchange dealing: Conducting transactions in which one currency is exchanged for another
- Money transferring: Transferring funds from one individual or organization to another
- Issuing or redeeming money orders, traveler’s cheques, or similar negotiable instruments
- Dealing in virtual currencies: Conducting transactions in cryptocurrencies or other digital assets
- Providing virtual currency exchange services: Exchanging funds for virtual currency or vice versa
It’s important to note that under Canadian law, both domestic and foreign MSBs that direct services at persons or entities in Canada are required to register with FINTRAC, regardless of whether they have a physical presence in the country.
Do You Need an MSB License in Canada?
Before diving into the registration process, it’s crucial to determine whether your business activities require an MSB license. You need to register as an MSB in Canada if:
- You offer any of the services listed in the definition above
- You provide these services in the course of business (not merely incidentally)
- Your services are directed at individuals or entities in Canada
Notably, certain entities are exempt from MSB registration requirements, including:
- Financial entities (banks, credit unions, etc.) that are already subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA)
- Crown agents
- Businesses that only process payments as an agent of a payee
If you’re uncertain whether your business requires MSB registration, consulting with a legal professional specializing in financial regulations is advisable.
The FINTRAC MSB Registration Process
According to FINTRAC’s official guidelines, the MSB registration process consists of the following steps:
Step 1: Determine if You Need to Register
Before beginning the registration process, confirm that your business meets the definition of an MSB under Canadian law. As outlined earlier, you need to register if you:
- Engage in foreign exchange dealing
- Money transferring
- Issue or redeem money orders, traveler’s cheques, or similar negotiable instruments
- Deal in virtual currencies
- Provide virtual currency exchange services
Step 2: Create a New FINTRAC Account
To begin the registration process, you need to:
- Visit FINTRAC’s MSB registration website
- Select “Create a new account”
- Follow the instructions to set up your account credentials
- You’ll receive a confirmation email with a verification link
- Complete the verification process to activate your account
Step 3: Log in to FINTRAC’s MSB Registration System
Once your account is created:
- Return to the FINTRAC registration portal
- Log in with your credentials
- Select “Money services business (MSB)” as your reporting entity type
- Click on “Register a money services business”
Step 4: Complete the Registration Form
The registration form requires detailed information about your business, including:
Business Information:
- Legal name and operating names
- Address of your main place of business
- Telephone number
- Email address
- Website address (if applicable)
- Type of MSB activities conducted
Business Structure Information:
- Business structure (sole proprietorship, corporation, partnership, etc.)
- Registration or incorporation details
- Fiscal year-end date
Ownership and Control Information:
- Details of individuals or entities that own or control 25% or more of your business
- Information about all directors and senior officers
MSB Services Information:
- Specific services offered
- Whether services are provided through agents
- Description of activities
Banking Information:
- List of financial entities where business accounts are held
Two-Year Review Information:
- Name of individual or firm that conducted the most recent two-year review (if applicable)
- Date of the last review
Step 5: Provide All Required Information
The registration form is divided into several sections:
- Identification information
- Activities of your business
- Other required information
All mandatory fields (marked with an asterisk) must be completed before you can submit your registration.
Step 6: Submit Your Registration
After completing all required information:
- Review the entire form for accuracy
- Submit your registration electronically through the FINTRAC system
- You will receive a confirmation of receipt of your registration submission
Step 7: Await FINTRAC’s Decision
After submitting your registration:
- FINTRAC will review your registration
- They may contact you for additional information or clarification
- Once approved, you will receive an MSB registration number
- Your registration will be valid for two years from the date of approval
There is no fee to register as an MSB with FINTRAC (this is a key difference from many other jurisdictions).
MSB Registration Eligibility Criteria
FINTRAC evaluates MSB registration applications against specific eligibility criteria, including:
Criminal Record Assessment
Individuals with certain criminal convictions may be ineligible for MSB registration, specifically:
- Money laundering or terrorist financing offenses
- Financial crimes, fraud, or other offenses related to financial services
- Violations of the PCMLTFA or associated regulations
FINTRAC conducts background checks on all owners, directors, officers, and other key individuals listed in the application.
Compliance History
FINTRAC also considers:
- Past compliance issues with FINTRAC regulations
- Compliance record with other financial regulators
- History of administrative monetary penalties (AMPs)
Financial Integrity
While not directly assessing financial stability, FINTRAC may consider:
- Evidence of serious financial mismanagement
- Bankruptcy status of key individuals
- Involvement in financial impropriety
Completeness and Accuracy of Application
Applications containing:
- Misleading information
- Material omissions
- Contradictory statements
may be refused or require substantial revision before approval.
Ongoing Compliance Obligations for Registered MSBs
Registration is just the beginning of your MSB compliance journey. Once registered, MSBs must fulfill various ongoing obligations:
Compliance Program Requirements
Every registered MSB must implement and maintain a comprehensive compliance program that includes:
- Appointment of a Compliance Officer: A designated individual responsible for implementing and overseeing the compliance program
- Written Policies and Procedures: Documented procedures for ensuring compliance with the PCMLTFA and associated regulations, including:
- Client identification procedures
- Record-keeping protocols
- Transaction monitoring processes
- Suspicious transaction reporting mechanisms
- Risk assessment methodologies
- Risk Assessment: A documented assessment of money laundering and terrorist financing risks specific to your business, considering:
- Types of services offered
- Delivery channels
- Client base characteristics
- Geographic exposure
- New technologies or practices
- Training Program: Regular, documented training for employees, agents, and others acting on behalf of the MSB regarding:
- AML/CTF legal obligations
- Company policies and procedures
- Client identification requirements
- Record-keeping responsibilities
- Transaction monitoring and reporting
- Effectiveness Review: A biennial review of the compliance program by an internal or external auditor to:
- Evaluate implementation effectiveness
- Identify deficiencies
- Recommend improvements
- Document findings and follow-up actions
Reporting Obligations
Registered MSBs must submit various reports to FINTRAC within specified timeframes:
- Suspicious Transaction Reports (STRs):
- Must be submitted within 30 days of detecting transactions where there are reasonable grounds to suspect they’re related to money laundering or terrorist financing
- Must include detailed information about the transaction and the grounds for suspicion
- Large Cash Transaction Reports (LCTRs):
- Required for cash transactions of CAD $10,000 or more
- Must be submitted within 15 days of the transaction
- Multiple transactions totaling CAD $10,000 or more by or on behalf of the same person within 24 hours are considered a single transaction
- Electronic Funds Transfer Reports (EFTRs):
- Required for international electronic funds transfers of CAD $10,000 or more
- Must be submitted within 5 working days of the transfer
- Terrorist Property Reports:
- Must be submitted immediately upon knowledge of property owned or controlled by or on behalf of a terrorist or terrorist group
- Also requires notification to the Royal Canadian Mounted Police (RCMP) and the Canadian Security Intelligence Service (CSIS)
- MSB Registration Updates:
- Changes to key information must be reported within 30 days
- This includes changes to ownership, services offered, business addresses, etc.
Record-Keeping Requirements
MSBs must maintain various records for a period of at least five years, including:
- Client identification records
- Transaction records for CAD $1,000 or more
- Records of all reportable transactions
- Compliance policies and procedures
- Training records
- Risk assessment documentation
- Effectiveness review reports
These records must be:
- Organized for easy retrieval
- Stored securely to protect client information
- Accessible for FINTRAC examination upon request
MSB Registration Renewal
MSB registrations must be renewed every two years, which involves:
- Updating registration information
- Submitting any new required documentation
- Paying the renewal fee (CAD $530)
- Confirming compliance with all regulatory requirements
Renewal applications should be submitted at least 30 days before the expiration of the current registration to ensure continuity.
Penalties for Non-Compliance
FINTRAC has substantial enforcement powers and can impose significant penalties for non-compliance:
Administrative Monetary Penalties (AMPs)
FINTRAC may impose AMPs for violations of the PCMLTFA and associated regulations:
- Minor violations: Up to CAD $1,000 per violation
- Serious violations: Up to CAD $100,000 per violation
- Very serious violations: Up to CAD $500,000 per violation
Factors considered in determining penalty amounts include:
- Compliance history
- Harm caused by the violation
- Whether the violation was deliberate
- The entity’s ability to pay
- Other relevant factors
Criminal Penalties
In cases of serious non-compliance, criminal charges may be pursued, which can result in:
- Fines of up to CAD $2 million
- Imprisonment for up to 5 years
- Both fines and imprisonment
Other Consequences
Non-compliance may also lead to:
- Revocation of MSB registration
- Publication of non-compliance and penalties on FINTRAC’s website
- Damage to business reputation
- Difficulty obtaining financial services
- Civil liability
Best Practices for MSB Compliance in Canada
To maintain good standing with FINTRAC and minimize compliance risks, consider implementing these best practices:
1. Invest in Compliance Technology
Utilize specialized AML/CTF software solutions to:
- Automate transaction monitoring
- Screen clients against sanctions and PEP lists
- Generate required reports
- Maintain comprehensive records
- Track compliance deadlines
2. Conduct Regular Internal Audits
Don’t wait for the biennial effectiveness review to identify issues:
- Implement quarterly internal compliance checks
- Regularly test client identification procedures
- Conduct random transaction reviews
- Verify record-keeping practices
3. Develop Strong Relationships with Financial Partners
Banking relationships are critical for MSBs:
- Maintain open communication with partner financial institutions
- Provide transparency regarding your compliance program
- Respond promptly to any compliance inquiries
- Consider periodic meetings to discuss compliance developments
4. Stay Informed About Regulatory Changes
FINTRAC regulations evolve regularly:
- Subscribe to FINTRAC’s updates and alerts
- Join industry associations focused on MSB compliance
- Consider retaining specialized legal counsel
- Attend compliance conferences and webinars
5. Implement a Culture of Compliance
Ensure compliance is prioritized throughout your organization:
- Involve senior management in compliance oversight
- Include compliance considerations in business planning
- Recognize and reward compliance-focused behavior
- Address compliance lapses promptly and thoroughly
Recent Developments in Canadian MSB Regulation
The regulatory landscape for MSBs in Canada continues to evolve. Recent and upcoming changes to be aware of include:
Virtual Currency Regulation Enhancements
As of 2022, FINTRAC has strengthened requirements for virtual currency businesses, including:
- Expanded record-keeping requirements for virtual currency transactions
- Enhanced due diligence requirements for virtual currency exchanges
- New travel rule requirements for virtual currency transfers
Cross-Border Money Transfer Requirements
Recent updates have expanded reporting requirements for cross-border transfers:
- Lower thresholds for certain high-risk jurisdictions
- Enhanced information requirements for intermediary financial institutions
- Stricter record-keeping obligations for transfer details
Beneficial Ownership Transparency
New requirements are being phased in regarding beneficial ownership information:
- More detailed ownership information required during registration
- Enhanced ongoing verification requirements
- Integration with federal beneficial ownership registry initiatives
Risk-Based Approach Emphasis
FINTRAC continues to emphasize the importance of a risk-based approach:
- More detailed risk assessment documentation expected
- Greater scrutiny of high-risk business relationships
- Increased focus on demonstrating risk mitigation measures
FAQ About Canada MSB Licensing
How long does it take to get an MSB license in Canada?
Answer: The standard processing time for a FINTRAC MSB registration is approximately 30-45 business days from the submission of a complete application. However, this timeline can vary based on application complexity, the current volume of applications being processed, and whether FINTRAC requires additional information or clarification. To avoid delays, ensure your application is thorough and all required documentation is included with your initial submission.
Can foreign companies obtain an MSB license in Canada?
Answer: Yes, foreign companies can register as MSBs in Canada if they direct services at Canadian individuals or entities, even without a physical presence in Canada. Foreign MSBs must comply with all the same registration requirements as domestic businesses, including appointing a compliance officer who is responsible for the Canadian operations. Additionally, foreign MSBs should be aware that they may need to establish a Canadian business entity or representative office depending on the nature and volume of their Canadian activities.
What happens if I operate an MSB in Canada without registering?
Answer: Operating an MSB in Canada without proper registration is a serious violation of the PCMLTFA. Consequences may include:
- Administrative monetary penalties up to CAD $500,000 per violation
- Criminal charges resulting in fines up to CAD $2 million and/or imprisonment up to 5 years
- Prohibition from providing financial services in Canada
- Reputational damage and potential civil liability
FINTRAC conducts regular compliance examinations and actively investigates unregistered MSB operations, often based on information from financial institutions, competitor reports, or public complaints.
Can my MSB registration be revoked, and if so, on what grounds?
Answer: Yes, FINTRAC can revoke an MSB registration under several circumstances:
- Providing false or misleading information during registration or renewal
- Serious or repeated non-compliance with PCMLTFA obligations
- Criminal convictions of owners, directors, or officers related to financial crimes, money laundering, or terrorist financing
- Failure to renew registration before expiration
- Ceasing to qualify for registration under the eligibility criteria
If FINTRAC intends to revoke a registration, they will provide written notice and an opportunity to make representations before a final decision is made.
Is there a difference between MSB licensing requirements across Canadian provinces?
Answer: While FINTRAC registration is required at the federal level for all MSBs operating in Canada, some provinces have additional licensing requirements. For example:
- Quebec requires MSBs to obtain a separate license from the Autorité des marchés financiers (AMF)
- British Columbia has specific requirements for certain types of money services under provincial consumer protection legislation
It’s important to research and comply with both federal FINTRAC requirements and any applicable provincial regulations in the jurisdictions where you operate.
How often do I need to update my MSB registration information?
Answer: MSBs must report any material changes to their registration information within 30 days of the change. Material changes include:
- Changes to legal name or operating names
- New or closed business locations
- Changes to ownership structure or key stakeholders
- Addition or discontinuation of MSB services
- Changes to contact information or compliance officer
Additionally, a full renewal of the MSB registration is required every two years, which involves reviewing and updating all registration information and paying the renewal fee.
Conclusion
Navigating the Canadian MSB licensing and compliance landscape requires diligence, attention to detail, and an ongoing commitment to regulatory adherence. By understanding the registration process, implementing robust compliance programs, and staying abreast of regulatory developments, MSBs can operate successfully while contributing to Canada’s efforts to combat money laundering and terrorist financing.
The information in this guide is designed to provide a comprehensive overview of the Canadian MSB licensing process as of 2025. However, regulatory requirements can change, and specific situations may involve additional considerations.
Disclaimer
While this information is thoroughly researched and intended to be accurate, it should not be considered legal advice. Businesses seeking to register as MSBs in Canada should consult with qualified legal professionals or contact FINTRAC directly for guidance specific to their situation. The authors and publishers of this content are not responsible for any actions taken based on this information.