MSB license in Canada

Canada is known for its business environment stability and predictability, attracting foreign investments and fostering business development. Due to its geographic location and trade agreements with the USA, the country has strong trade connections and access to international markets. Foreign investors choose Canada for several reasons: a stable economy, developed democracy, transparent legislative framework, tax incentives, and the active development of the fintech market. To provide financial and related services, a company can obtain an MSB [Money Service Business] license.

Advantages of MSB License Canada

The Money Service Business license grants the right to offer the following services in and from Canada:

• currency exchange;
• transferring and remitting funds, payment service provider services;
• exchange and transfer of crypto assets [if the company does not open crypto wallets or hold clients’ crypto assets for a period, additional certification from the Securities Commission is not required];
• crowdfunding platform services [additional registration is required for this activity]. 

After registering as an MSB in Canada, the licensee can offer services within Canada’s territory and to clients from other countries, adhering to rules set by regulators and some important additional aspects related to “direct advertising.”

SBSB experts provide comprehensive legal support for their clients during MSB registration in Canada. Our services are based on a comprehensive approach: from consultations and preparing the necessary document package to completing the registration process, opening accounts, and successfully launching your business.

Stages of Canada MSB Registry 

The Canadian regulator FinTRAC [Financial Transactions and Reports Analysis Centre of Canada] is responsible for reviewing prepared documents and making decisions on issuing Money Services Business license Canada. Despite providing the option for an online registration process, the procedure is multi-stage and challenging. Difficulties arise during the preparation of mandatory document forms. An online interview with the regulator is also possible.

If you need to register an MSB in Canada, the SBSB team will guide you through all the nuances of the registration process. We are familiar with the specifics of the regulatory body’s work and all its requirements, allowing you to save time and launch your Canada money service business as quickly as possible.

Canada MSB license acquisition includes the following stages:

• agreeing on a corporation name with a minimum of two words [one must indicate the direction of the provided services, e.g., “pay”];
• registering a Canadian corporation;
• preparing a business plan, AML/KYC policies;
• completing and submitting a pre-registration form on the FINTRAC website;
• possibly undergoing an online interview with FINTRAC;
• completing a self-assessment form and submitting it to FINTRAC;
• gaining access to the FINTRAC platform and filling out the questionnaire;
• directly registering as an MSB and displaying data in the FINTRAC register. 

Correctly filled FINTRAC forms, well-prepared documents, preparation of the corporation’s leadership, and the AML officer for interviews are crucial for receiving a positive decision from the regulator for MSB registration.

Key Requirements for Obtaining MSB License

There are no requirements for local staff, local MSB owners, or a physical office in Canada [a virtual office is sufficient]. Notably, unlike licenses in other jurisdictions, Canadian MSB licenses do not have minimum capital requirements.

To undergo the Canada MSB registration procedure, you need to gather information and prepare a document package, including:

• business information according to the business plan form;
• business plan;
• personal and professional information about senior management and company owners;
• information about the AML officer and their experience;
• corporate organizational structure and number of staff;
• AML/KYC policies;
• list and description of services to be provided;
• planned financial indicators;
• contact details of the company’s representative, etc. 

MSB License Cost in Canada 

The cost of an MSB license depends on several factors. The service may include payment for all government fees and virtual office rent for one year. SBSB experts can provide an estimate of the expenses related to registering as an MSB in Canada and comprehensive legal support after a detailed study of your project.

Timeline for Obtaining MSB License

Corporation registration takes up to 2 weeks after the preliminary name check. Document preparation and MSB registration typically take 2–3 months, and the FINTRAC upload period takes up to 4–5 months.

However, this is provided the client timely provides all information and documents, and the regulator does not raise additional questions or requirements.

To mitigate refusal risks and save time, it’s advisable to turn to the SBSB team. We assist in the turnkey registration of MSB license in Canada, handling all legal matters.

Overview of the Financial Services Business (MSB) and Foreign Money Services Business (FMSB) in Canada

The financial services business represented by MSBs is one of the fastest-growing sectors in Canada. Thanks to its stable economy, transparent legislative framework, and active fintech market, companies operating as a money service business in Canada can offer innovative solutions in money transfers and currency exchange. These companies successfully compete in the domestic market by providing services to both individual and corporate clients.

In contrast, the business of foreign money services (FMSB) targets international operations. FMSBs often operate under a similar model, but their activities are aimed at serving clients from other countries, allowing them to benefit from more flexible regulatory conditions. Despite their differences, both models require a high level of transparency, adherence to AML/KYC standards, and regular interaction with regulators.

Regulatory Authority and Legislation

The primary regulatory authority in Canada is FINTRAC (Financial Transactions and Reports Analysis Centre of Canada), which oversees money service operations. FINTRAC analyzes financial transactions, monitors compliance with legislative norms, and combats money laundering. The legislation is based on strict AML (Anti-Money Laundering) and KYC (Know Your Customer) rules, ensuring a high level of transparency and protection for the financial system. Although a Canadian MSB does not require minimum capital or a physical local presence, adherence to regulatory norms is mandatory for all market participants. The legislative framework contributes to business development by providing stability and predictability in operating conditions. Companies registered as MSBs must regularly update their documentation, conduct internal audits, and interact with FINTRAC to confirm compliance with all requirements. Thus, the regulatory environment in Canada creates favorable conditions for the development of both domestic and foreign money service providers, ensuring a high level of trust among clients and investors.

What Services Can Canadian MSBs Provide

• Currency Exchange: Facilitate the exchange of different currencies.
  
  
• Money Transfers and Remittances: Conduct domestic and international money transfers and remittance services.
  
  
• Payment Service Provider Functions: Offer services related to payment processing.
  
  
• Crypto Asset Exchange and Transfers: Enable the exchange and transfer of crypto assets, provided the business does not store clients’ cryptocurrencies.
  
  
• Crowdfunding Platform Development: Develop crowdfunding platforms (with additional registration required for such projects).
  
  

The Difference Between Canadian MSBs and FMSBs

In Canada, there is a clear distinction between MSBs (Money Service Businesses) and FMSBs (Foreign Money Service Businesses). Canadian MSBs are focused on providing financial services within the domestic market and to Canadian clients in accordance with local legislation. In contrast, FMSBs specialize in handling foreign monetary flows and typically serve clients outside Canada. FMSBs are not subject to the same strict internal regulatory requirements, which allows them to operate more flexibly; however, they must still adhere to international AML/KYC standards. The differences are determined by the scope of operations, the clientele served, and the scale of activities.