Atrium Legal Lab

Canada MSB License
Money Services Business Registration
FINTRAC

Canada
Money Services Businesses (MSB) and
Cryptocurrency

Licensing Services
Our Company Services
Services we DO and Services we DO NOT DO

Our company is EXCLUSIVELY engaged in assisting worldwide clients, either individuals or corporate entities, to get duly and properly registered and licensed with local Regulators and Financial Authorities to get respective official licenses to legally carry out their cryptocurrency business activities.

Atrium Legal Lab does not carry out any sort of cryptocurrency business trade

Financial Activities you carry out by
Holding a Canadian MSB License!

An MSB registered entity can offer any of the following services to the public:

Foreign exchange dealing
Money transferring
Issuing or redeeming money orders, traveler’s cheques or anything similar
Dealing in virtual currency

No capital requirement, no annual registration fees.

Money services businesses (MSBs)

If you are a money services business (MSB), you need to know about all the obligations that apply to you. This includes registering your business with FINTRAC, reporting, keeping records, identifying your clients, and having a compliance program.

Registration is valid for a two-year period and must be renewed before expiry.
There are no fees associated with the registration or the renewal of registration.
FINTRAC may deny or revoke registration if it determines that a reporting entity is not eligible for registration.

Who is a money services business (MSB)?

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

  • Foreign exchange dealing.
  • Conducting transactions where you exchange one type of currency (USD$ for CAD$) for another.
  • Money transferring.
  • Transferring funds from one individual or organization to another using an electronic funds transfer network or any other method.
  • Cashing or selling money orders, traveler’s cheques or anything similar.
  • This may also include cashing or selling traveler’s cheque or anything similar. This does not include cashing cheques made out to a particular individual or organization.
  • Dealing with virtual currency.
Who is not a money services business (MSB)?

You are not an MSB if:

  • You offer one or more MSB services strictly as an agent for an MSB. It is the MSB for which you are an agent that has to register with us.
  • You offer one or more MSB services as part of other activities for which you are a reporting entity.
Register your money services business (MSB)

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

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 activities as listed below:

  • When to identify individuals and confirm the existence of entities – Money services businesses;
  • Methods to identify individuals and confirm the existence of entities;
  • Business relationship requirements;
  • Ongoing monitoring requirements;
  • Beneficial ownership requirements;
  • Third party determination requirements; and
  • Politically exposed persons and heads of international organizations – Money services businesses.
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 analyze 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: Within 30 days of determining that there are reasonable grounds to suspect that a transaction or an attempted transaction is related to the commission or attempted commission of a money laundering or terrorist activity financing offence, you must submit a report.

Terrorist property: When you know that property in your possession or under your control is owned, controlled by or on behalf of a terrorist or a terrorist group, you must submit a report. You must also submit a report to the Royal Canadian Mounted Police (RCMP) and the Canadian Security Intelligence Service (CSIS).

Large cash transactions: When you receive $10,000 CAD or more in cash either in a single transaction or in multiple transactions within a 24-hour period, you must submit a report within 15 calendar days.

Electronic funds transfers: When you send or receive client-initiated instructions to transfer $10,000 CAD or more internationally; either in a single transaction or in multiple transactions within a 24-hour period, you must submit a report within 5 business days.

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.

If you have a computer and an internet connection, 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.

Fintrac Regulations

In the context of the applicant’s business offerings, the PCMLTFA (Proceeds of Crime Money Laundering and Terrorist Financing Act) currently applies to domestic money service businesses only. In Regulatory Impact Analysis Statement for the PCMLTFA’s proposed amendments (“Proposed Regulations”), the Government of Canada admits the lack of regulation for foreign money service businesses and virtual currency businesses. Whether the Applicant registers a head office in Canada and becomes a domestic money service business (“MSB”), or waits until the Proposed Regulations to regulate foreign money service businesses come into force, the following regulations will apply:

Canada
Virtual Currency Dealers must register as MSBs by June 1, 2021
Important Changes to Canada's Anti-Money Laundering Regime

Not all deadlines have been paused by the COVID-19 pandemic. Entities dealing in virtual currencies (defined below) must comply with a variety of new requirements, including implementing a compliance program and reporting suspicious transactions.

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.

What is required to register as an MSB?

To register as an MSB, an entity must first:

  • develop and apply written compliance policies and procedures that are kept up to date and approved by a senior officer;
  • appoint a compliance officer responsible for implementing and overseeing the compliance program;
  • 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 its behalf; and
  • review its compliance program every two years to test its effectiveness.
Other obligations beginning June 1, 2021

In addition to the new registration obligations, certain other Amendments are scheduled to take effect on June 1, 2021 that will apply to MSBs dealing in virtual currency. Specifically, MSBs will be required to:

  • report suspicious transactions;
  • conduct know-your-client verification in respect of the exchange of any amount of virtual currency for fiat currency, fiat currency for virtual currency or one virtual currency for another;
  • maintain a "large virtual currency transaction record" for every CAD $10,000 or more in virtual currency received in a "single transaction" (which can include multiple smaller transactions that occur within 24 hours); and
  • determine whether a person who requests a transfer of CAD $100,000 or more in virtual currency (or is a beneficiary of virtual currency of CAD $100,000 or more) is a politically exposed person.

These requirements have the potential to create significant compliance costs for regulated entities. Businesses that deal in virtual currency should plan ahead.

Canada MSB License
Money Services Business

Our Firm assists international clients in securing a Canada MSB License (Money Services Business). Amended in December 2001, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) has come into effect to deter financial crimes within the land of Canada.

With the aim of enhancing the regulatory framework for money services businesses, the act also serves to combat transnational crimes, particularly in money laundering and terrorist activities.
Introduction to Canada MSB License:

  • Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, your business is required to register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). As of 1st June 2021, foreign money services businesses were also required to register with FINTRAC and thereby, comply with their reporting and record-keeping requirements.
  • Non-compliance with the Act may result in criminal or administrative penalties. Generally, non-compliance will be followed with an assessment by FINTRAC to determine a suitable response. Administrative monetary penalties are commonly used to address repeated non-compliant behavior, and facilitate future compliance with the Act.
  • In extreme cases where non-compliance to the Act is extensive or otherwise deemed to be impossible, criminal penalties may ensue. Criminal penalties such as a fine or imprisonment can be issued under these cases.
When will you require a Canada MSB License?

Under the Act, a person must have in force a Canada MSB License (Money Services Business) to be entitled to carry on a business of:

#1: Providing one of the following services:

  • foreign exchange dealing;
  • money transferring;
  • issuing or redeeming money orders, traveller’s cheques or anything similar; and
  • dealing in virtual currency.

#2: Providing direct services at persons or entities in Canada

  • This will apply if you are directing your promotional materials to persons or entities located in Canada, operating Canadian domain name or otherwise, have your business listed in any Canadian business directories such as Akama, Strictly Canadian, LiveBusiness and more.
  • Otherwise, offering money transfer services, performing foreign exchange transactions for single transfers amounting to more than $1,000 with the same individual or entity can also be considered as a direct service.

#3: Providing these services to clients located in Canada

  • The Act will also be applicable to your foreign business if you are providing services to clients whose address is in Canada, possess banking, credit card or payment processing service in Canada or identity is issued by a Canadian province or territory.
  • It is also important to note that you will not be subjected to this Act if you are operating strictly as an agent for a money services business or acting as a reporting entity performing money services business activities while also running other related services.
  • If you are unsure whether your Money Services Business requires the Canada MSB License, feel free to contact us for a non-obligatory consultation. Our team of experts will revert within the next 24 hours.
Mandatory requirements

Registration
  • Typically, all businesses – foreign or local operating in the field of money services will be required to register with FINTRAC.
  • Generally, if you are found guilty or involved in any money laundering offences or offences listed under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, Controlled Drugs and Substances Act or the Criminal Code, you will not be eligible.
  • Alternatively, corporations, partnerships and other forms of entities with owners with share ownership of 20% or more are also not eligible.
  • There are no registration fees imposed by FINTRAC.
  • The registration process will require various KYC documents such as incorporation information, personal details about your business’ owners and senior management, number of employees, bank account information and more.
  • For foreign businesses, a police record check will be instituted. You will also require to submit the name and address of a Canadian representative. The representative will be mainly in-charge of receiving notices and documents on behalf of your company and liaising with government authority.
  • Upon completing the registration process, you should receive an approval notice and your registration number.
Compliance Program
  • A FINTRAC examination will be conducted by the relevant authority to review if your business is following the required documentation processes and whether relevant employees or agents are trained sufficiently to maintain and upkeep with all reporting obligations.
  • All Canada MSB License (Money Services Business) applicants will have to appoint a compliance officer who is mainly responsible to implement and review the program, plan and execute compliance policies, review mitigation measures and strategies as well as prepare a developmental program to ensure that all employees and agents involved in your money services business are trained sufficiently.
  • Typically, the compliance officer can be yourself or another individual. For best practice, Atrium Legal Lab Consultants advises you to appoint a person who is not involved in the receipt, transfer or payment of funds. This would ensure that there is an active check-and-balance system in place.
  • To ensure efficiency, a compliance officer is permitted to delegate duties to other employees. However, all responsibility for the implementation of the compliance program will fall onto the compliance officer.
  • It is expected that the compliance officer appointed have the necessary knowledge and expertise in your business’ functions and structures, understand the risks and vulnerabilities as well as have the necessary capabilities to implement an effective program. The compliance officer should also be given the ability to report compliance-related issues to the board on a regular basis.
  • The compliance officer appointed will also be responsible for reviewing the program biennially.
  • Generally, the policies adopted should be comprehensive in managing your risk assessment activities, the measures undertaken, the ongoing compliance training program and a review about the effectiveness of the program.
  • Other relevant details to include are KYC documents and transaction reports. It is also important that ministerial directives and transaction restrictions are documented. The level of detailedness will be dependent and varied according to the size, structure and complexity of your business.
  • All compliance policies and procedures should be written in a form that permits access to all its intended audience. The policies and procedures should also be continuously updated to ensure relevancy. Any new policy planned should also be approved by a senior officer.
  • When documenting your risk assessment, you can consider evaluating the mitigation measures undertaken. As for new products, it is expected that you consider and document any risks associated with it while collectively plan strategies to alleviate these risks.
  • The development of an ongoing compliance training program should be done in writing, constantly reviewed and updated. For sole proprietorships, you are not required to have a training program but instead, you should be able to substantiate the availability of all other required factors needed to substitute a compliance program.
  • The training program should be made available to front line staff or agents, employees involved in client transaction activities, handling cash or funds or senior managers and internal auditors overseeing the compliance program.
  • A simple guideline for your training program would be to include comprehensive background information on money laundering and how the process works, the available compliance policies and procedures to prevent and detect such cases and the due responsibility of each employee. It should also be tailored to the nature of your business so that your employees and staffs will be able to correlate and recognize suspicious transactions.
  • The biennial review can be conducted by an internal or external auditor who has sufficient knowledge of the Act and its associated regulations.
Verification of Clients’ Identity
  • In every Canada money services business, understanding and knowing your client is fundamental.
  • Subjected to the Act and its associated regulations, all money services businesses are mandated to verify their clients’ identity.
  • Typically, the verification process would entail reviewing its name and address as well as the names of the corporation’s directors.
  • This identification process is applicable when performing services such as:
    • issuing or redeeming negotiable instruments of $3,000 or more;
    • remittances or transmissions of $1,000 or more;
    • foreign currency exchange of $3,000 or more;
    • large cash transactions;
    • suspicious transactions; and
    • client information records
Reporting
  • Canada MSB License (Money Services Business) holders are mandated under the Act to complete and file transactions and property reports.
  • Should there be a reasonable amount of evidence to doubt the authenticity of a particular transaction, you have to submit a Suspicious Transaction Report as soon as possible.
  • Otherwise, for big sums amounting to $10,000 CAD or more internationally, a report must be submitted within 5 business days.
Record Keeping
  • Typically, all Canadian MSB license (Money Services Business) holders will have to maintain and safe keep records of suspicious transactions, large cash transactions, transactions of $3,000 or more, foreign currency exchange, ongoing service agreements.
  • These records should be available for inspection by FINTRAC within 30 days upon request.
How to apply for an MSB license in Canada?
  • Atrium Legal Lab Consultants will assist you in registering a Canadian company by providing a local company address, local nominee director and local company secretary. Typically, this process should take approximately 2 weeks.
  • Upon registering the company, we will proceed to open a corporate bank account with a reputable local or international bank. You can expect your corporate bank account to be ready in 4 weeks.
  • Concurrently, our dedicated team of consultants will assist you in registering with FINTRAC through its online portal. Typically, this will require going through a pre-registration process submitting various KYC documents such as your business number, email address, and more.
  • Following, we will submit your registration form detailing your bank account information, information about your compliance officer, number of employees, incorporation information, and more. For foreign businesses, you can expect a police check record. Should the police check record require translation, we will review and translate the document into English for your perusal.
  • FINTRAC requires that every company provides the name and address of a Canadian representative. If so required, we will appoint a fit and proper representative to receive notices and documents on your behalf.
  • Afterward, our team of consultants will assist you in preparing a comprehensive business plan as well as plan a compliance program. The business plan and compliance program will be drafted in writing for your further review and in accordance with the Act and associated regulations imposed by FINTRAC.
  • As all companies require a compliance officer, Atrium Legal Lab Consultants will also assist in recruiting a fit and proper compliance officer. The compliance officer will also be equipped with the necessary knowledge about the Act and its associated regulations to ensure that your business remains compliant.
  • Developing and applying written compliance policies is fundamental in upkeeping the license. Our team will review the adopted compliance policy and advise you on how you can more effectively update and improve the compliance program. We will also assist you with the drafting of an effectiveness review of the compliance program.
  • Prior to a FINTRAC examination, Atrium Legal Lab Consultants will also advise you on how you can update the required documentation or improve on the existing compliance program. This is to ensure that your business remains capable of addressing all money laundering or financial crime threats.

Contact us to find out more about how to secure Canada MSB License to conduct Money Services Businesses. Our team of experts will revert within the next 24 hours.

FAQs

How do you report to FINTRAC?

Reporting entities can send their reports electronically to FINTRAC provided if you own the technical capabilities to do so. However, terrorist property report or where technical capabilities are not met for the other reports can be submitted in written.

What are the deadlines for the various reports?

The deadlines differ from reports to reports. For electronic funds transfer reports, they should be sent no later than 5 working days to FINTRAC. For suspicious transaction reports, they should be sent no later than 30 calendar days from where it can be determined with reasonable suspicion that the attempted transaction is possibly part of a financial crime. As for large cash transaction and casino disbursement reports, they should be submitted no later than 15 calendar days.

What will happen to the reports I submit?

The reports submitted will be carefully analyzed by FINTRAC to evaluate whether there are any possible threats of financial crimes. Each report is retained for 10 years by FINTRAC.

Will any fees be charged during reporting?

FINTRAC does not charge any fees – be it during registration, or further to file a report.

Is reporting incomplete suspicious financial transaction necessary?

Yes, you must still report an attempted transaction if you have sufficient evidence to back up or suspect that it is a possible case of financial crime.

Must I report any terrorist property to other authorities?

Yes, under the Criminal Code, you are mandated to relay any of such information or transaction to the RCMP, Anti-Terrorist Financing Team and CSIS Financing Unit.

Does FINTRAC freeze funds?

No, FINTRAC does not freeze or seize any funds.

Will the privacy of my clients be protected?

The Privacy Act strictly regulates how FINTRAC can use and disclose information collected during reporting. This means that the personal information collected from you will be protected from any unauthorized disclosure and can only be disclosed where there are reasonable grounds to suspect that the transaction is possibly linked to a financial crime.

What are the penalties involved?

Mainly, an administrative monetary penalty will be issued for any non-compliance cases. However, it is to note that the penalty is not the first solution to non-compliance. Rather, FINTRAC will work together with you to correct the non-compliant behavior before considering charging any penalty.

What is the difference between a civil and criminal penalty charged?

Under the PCMLTFA, both penalties apply but are meant for differing purposes. A criminal penalty is mainly adopted to punish any wrongdoing and will include fines, imprisonment or both. While an administrative monetary penalty is used strictly against compliance violations. It will involve an incentive to take up corrective actions. FINTRAC will not be able to concurrently pursue both punishments.

Timeline

Atrium Legal Lab will complete your Canada company registration within 1 week after receiving required documents.
Our 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.
On average, the engagement will be completed within 2 to 3 months.

Next steps

If you are still interested in setting up a Canada MSB business, kindly call or email us.
Our Team of experts will be pleased and ready to guide and assist you, answering to all your questions and matters you may need to clarify.



Our Services

In reply to your request and interest to be duly registered and licensed in Canada with FINTRAC, we are pleased to provide you all relevant information, requirements, timings and fees.

Should you have any question, please do not hesitate to contact us again.

Our Team of experts will be ready to help and assist you on your application.

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The information and materials contained in this website do not constitute an offer, invitation, solicitation, advice or recommendation to buy the products and services offered and rendered by Atrium Legal Lab and shall be applied with prior consultation.

Atrium Legal Lab does not offer legal or tax advice without consultation with certified professionals with related appropriate skill and expertise.

The information contained in this website is for general guidance on matters of interest only and should not be considered as guidance for financial or tax decisions, or a substitute for specific professional consultation.

Atrium Legal Lab is not a bank, nor does it provide banking services. Atrium Legal Lab offers international company formation, corporate administration services, and bank/broker introductory services and account opening assistance.

This website is only used for promotional marketing purposes of Atrium Legal Lab and is not intended to portray that this is the site of a bank. All prospective clients should consult a properly qualified tax professional in their own country to determine their own tax implications prior to embarking on any strategy described in this website. Since laws in each country are different, constantly change and can be subject to different interpretations by courts of law, any information herein regarding tax minimization needs to be verified by such competent counsel. While we have made every effort to ensure that the information contained in this website is accurate and correct due to constant changes in laws, rules and regulations Atrium Legal Lab Ltd accepts no liability for any loss or damage arising directly or indirectly from action taken or not taken relying on the information contained in this website. In particular no warranty is given as to the completeness, accuracy, reliability of such information and as to whether it is at all times up to date.

Atrium Legal Lab accepts no liability for any loss or damage direct or indirectly arising from the application of any information contained in this website, including any loss, damage or expenses arising from, but not limited to, any defect, error, mistake, inaccuracy, reliability of this website, its contents or related services, or due to any unavailability of this Site or any part thereof of any contents or related services.

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Due to our internal policies to prevent fraudulent activities or violations of our internal AML policies we are regretting that we do not provide consultations, email support, on-boarding activities and customer care to all OECD black listed countries and their citizens / entities.