Eternity Law International News Financial Licensing in Canada

Financial Licensing in Canada

February 21, 2022

This jurisdiction has a very sound banking system. Besides, financial licensing in Canada has a lot of favorable conditions for local and foreign entrepreneurs. The country successfully survived the big crisis, and now the state is proud of the economy, which fully meets the following criteria:

  • proper protection of property rights;
  • Hi-tech;
  • activating innovations;
  • flexible and loyal tax system;
  • active fight against corruption;
  • stable condition of the securities market that does not lend itself to general risks;
  • protection of investors.

The payment systems of this country, like banking institutions, are very important in the financial direction. Canadian authorities set fairly simple demands for firms wanting to provide such services, thus attracting not only residents of the country, but also foreign citizens for the development of financial field.

Financial Licensing in Canada: What is Required to Proffer Financial Services and Enter Canadian Market?

About the Money Service Business (MSB) License

MSB is a non-banking financial firm that allows you to engage in certain types of financial activities:

  • transfer funds;
  • issuing or redeeming traveler’s checks, financial orders, or bank charges;
  • cash checks;
  • use ATMs, including renting commercial premises to install ATMs, if the landlord is responsible for issuing cash from the banking institution;
  • conduct transactions with cryptocurrency.

If you are MSB, you should know all the responsibilities that apply to you. This includes company registration, record keeping, record keeping, user knowledge, and having a compliance program in place.

Who needs such licensing?

MSB license is required if you own a business in Canada to offer certain types of services to residents.

  1. Currency exchange – transactions in which you exchange one type of currency for another (for example, exchanging a US dollar for a Canadian dollar).
  2. Money transfers – funds transfer from one individual or company to another via electronic money transfer network, or otherwise. Issuance or acceptance of money orders or other similar negotiable instruments.
  3. Sale of cryptoactives – this includes exchange of virtual assets and transfer services. In turn, virtual currency exchange includes the exchange of cash for cryptocurrency and vice versa, as well as the exchange of one virtual currency for another. The transfer of virtual currency includes the sending of cryptocurrency at the request of the client, a receipt for the transfer of digital money for transfer to the recipient.

The new Canadian laws that went into effect in 2020 have come in handy for cryptoexchanges and payment processors that do business with digital assets. Now such companies at the state level are considered financial service providers.

Who Is Financial Services Company?

  • A company that is authorized or licensed for at least one of the above services.
  • The firm has been registered and is considered a supplier of at least one of the specified services.
  • Structure advertises that provides any of services mentioned.
  • The firm does not advertise any MSB services, but does provide money transfer services of any denomination, transact foreign exchange in excess of $1,000 per transaction with a single individual or organization, perform money orders, traveler’s checks or others in an amount that is more than 1 thousand US dollars for 1 transaction with one individual or company or claims profits from any of the mentioned services as profits of a separate business for paying taxes.

How Is Financial Licensing in Canada Implemented?

FINTRAC (Financial Transactions and Reports Analysis Center) is a financial intelligence agency that reviews documents. This structure conducts licensing.

First, you need to register a company in Canada

You can set up a company in any province. For those who are not residents of the country, British Columbia is best suited.

  1. The name of the company must consist of at least 2 words, one of which describes the main type of activity of the company, for example, “payments”, “money transfers”, etc. No abbreviations can be made.
  2. Registered address. The firm must lease an office and provide a valid lease agreement and a photo of its office upon receipt of the license.
  3. Initial capital. The minimum of such capital is not set, but it is better that it can realize the opportunities for planning and developing the company.
  4. When registering, there must be at least 1 director – an individual who has work experience in the financial direction.

If you intend starting operating in this direction, let’s consider ready licenses for sale. Our specialists will help you with any case and give you professional advice. Contact us in the way convenient for you.

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