Crypto license obtainment in Canada (MSB)
Canadian MSB is a good alternative to European EMI license.
Registration of Canadian MSB should be done in a special register of businesses providing payment services, which is maintained by the Canadian regulator FINTRAC (Financial Transactions and Reports Analysis Centre of Canada). Money Services Business (MSBs) must fulfil specific obligations as required by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations, to help combat money laundering and terrorist activity financing in Canada.
There are two types of businesses that must fulfil obligations under the PCMLTFA in Canada: Money Services Business (MSB) and Foreign Money Services Business (FMSB).
The company is a Money Services Business (MSB) if all of the following criteria apply:
1-The company offers at least one Money Services Business (MSB) service to the public:
• Foreign exchange dealing;
• Remitting or transmitting funds;
• Issuing or redeeming money orders, traveller’s cheques, or anything similar;
• Dealing in virtual currency;
• Crowdfunding platform services.
2-The company has a place of business in Canada
The company is a foreign Money Services Business (FMSB) if all of the following criteria apply:
1-The company is engaged in the business of providing at least one Money Services Business (MSB) service:
- Foreign exchange dealing;
- Remitting or transmitting funds;
- Issuing or redeeming money orders, traveller’s cheques, or anything similar;
- Dealing in virtual currency;
- Crowdfunding platform services.
2- The company does not have a place of business in Canada:
- The company is not incorporated in Canada;
- The company does not have a physical location in Canada; or
- The company does not have employees, agents, or branches in Canada.
3- The company directs its MSB services at persons or entities in Canada;
A business is directing services at persons or entities in Canada if at least one of the following applies:
- The business’s marketing or advertising is directed at persons or entities located in Canada;
- The business operates a “.ca” domain name; or
- The business is listed in a Canadian business directory.
4- The company provides these services to clients in Canada (that have a connection or residential ties with Canada).
What is the difference between the Money Services Business (MSB) and Foreign Money Services Business (FMSB)?
For the foreign Money Services Business (FMSB), there are more complex procedures to get registered, as well as there are several limitations on how the company can operate.
The main differences between the Money Services Business (MSB) and the foreign Money Services Business (FMSB) in the registration process:
- The company must be registered abroad.
- In addition to the documents required for the registration of the Money Services Business (MSB), the foreign Money Services Business (FMSB) must submit police record checks for the CEO, all directors, and beneficiaries. Police record checks are required from the country in which these employees are residents.
- The company must have an official representative of the company in Canada – a resident of Canada, who will communicate with the regulator (Fintrac) on behalf of the company.
- The registration process for the foreign Money Services Business (FMSB) usually takes longer than for the Money Services Business (MSB).
The main differences between the Money Services Business (MSB) and the foreign Money Services Business (FMSB) in operations:
For Canadian banks and credit unions, the foreign Money Services Business (FMSB) is a huge high risk. Roughly speaking, you will need to forget about opening correspondent accounts even in credit unions. The only option is third-party payment processing providers and remittance providers.
REQUIREMENTS FOR CANADIAN MSB LICENSE OBTAINING:
-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 most convenient province for company formation is British Columbia with a commercial address in Vancouver
-Capital – minimum capital is not determined by the supervising authority, but we advise to declare at least 5 000 CAD
-Management – at least one private director with experience in the financial sphere has to be appointed at the stage of incorporation, a person responsible for AML/CTF should be appointed at the stage of starting operational activity of the company. Director and AML responsible person do not have to be local
-Compliance reporting – company registered with FINTRAC has to complete reports about certain types of transactions according to 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)
Our company provides full assistance in license obtainment.
Please, contact our specialists for more information about fees and personal requirements for your project.