The establishment of an MSB in Canada requires acquiring a specific license from FINTRAC, a regulatory authority of the country regulating a Canadian financial market. In this overview, we collected the main points regarding money service businesses: authorizations, requirements, the specter of regulation, and due diligence obligations.
Overview of the regulatory authority of the Canadian financial market
FINTRAC is a FIU in the Canadian jurisdiction. The authority is responsible for the identification, prevention and fighting with illicit money turnover and the funding of terroristic operations. FINTRAC’s compliance functions present an efficient contribution to the security of Canadian financial market participants and the safeguarding of the integrity of Canada’s financial vehicle.
FINTRAC does not depend on police services, law enforcement agencies, and other organizations. It is accountable to the Ministry of Finance, which in turn depends on Parliamentarians.
Scope of authorizations granted by an MSB license
A license for MSBs permits institutions to execute such services as:
- Forex Dealing;
- Fund Transfers;
- Issuing Money Orders, Traveler’s Checks;
- Dealing in Cryptocurrency.
Indemnity insurance
A registered MSB is obliged to maintain insurance policies in an amount equivalent to the size and nature of the securities firm to be able to cover at minimum professional indemnity. If that coverage amount is not enough, the Commission may deny the application for registering. But, this obligation is not applicable to organizations carrying out solely advisory services on securities.
Recordkeeping Obligations
MSB License holders should file reports on payment operations they conduct. Provided that there are sufficient evidences to doubt the validity of a certain transaction, a company should submit a STR without delays. For large transactions from 10,000 CAD, a report must be provided within five days. MSBs are expected to keep records of risky payment operations, transactions of $10,000 or more, Forex services, etc.
Due Diligence
Under financial law, all MSBs must conduct Due Diligence (DueD) to formally verify the identities of all their clients. To conduct DueD for licensing, a company must provide the below-mentioned documents of all directors and shareholders:
- A duplicate of the passport;
- Proof of address;
- CV;
- Business Plan;
- Financial Projections;
- Constitution documents;
- Other supporting papers if needed.
Eternity Law International offers a turnkey solution for licensing financial institutions. Our licensing package for MSB in Canada includes promotion of your request to the Canadian regulator, drafting and reviewing application documents and questionnaires, following up with the application, and ensuring the provision of extra details required by the related department of Canada.
Please contact us to get more information.
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