Companies dealing in cryptocurrencies are obliged to acquire an MSB license in Canada to continue the provision of services in this state. Under the PCMLTFA, these companies should complete registration with the FINTRΑC to ensure the proper business operation. Generally, all institutions offering finance-related services, crypto exchange services, and issuance services must acquire an MSB license and FINTRΑC registration. In this respect, according to the law, foreign MSBs are also obliged to get registered and conduct their operations in line with their KYC and AML policies.
Who is subject to mandatory licensing?
In line with the PCMLTFA, a company must acquire an MSB license in Canada if its operation includes any of these as follows:
- If the company is offering any of these proposals to clients:
- Forex dealing;
- Crowdfunding services;
- Cryptocurrency dealing;
- Money remittance or receiving/sending;
- Issuance of orders, traveler’s checks, or others.
- An entrepreneur has a business, meaning that:
- The company is registered in Canada;
- There is a physical office in Canada; or
- The company has staff or many offices in Canada.
Other conditions to getting an MSB license
- A legal entity is granted formal permission or license regarding any of the above-listed services.
- A legal entity is conducting the provision of any of the above-listed services.
- A legal entity advertises (traditional and digital marketing) that conducts any of the above-listed services.
- A legal entity does not advertise any MSB services, however, it executes the following activities:
- a) transfers funds in any amounts;
- b) implements Fοrex swaps (a sales or purchase operation) for more than CAD1,000 in one payment operation with the same individual or company. In this regards, one payment operation means 2 or more transacting acts that are referred to as an overall payment of less than CAD1,000 each that are completed within 24 hours and that totaling in CAD1,000 or more; or
- c) issues or redeems funds orders, travelers` checks or other negotiable financial tools for over CAD1,000 in one payment operation with the same natural person or company. In this regards, one payment operation can be explained as 2 or more transacting acts backed to the redemption of funds orders, travelers’ checks, or other tools of lesser than CAD1,000 each that are conducted within 24 hours and that in sum are CAD1,000 or more.
- An entity defines the obtained profits from any of the above-listed services as returns from a separate business for taxation matters.
Who is not subject to licensing?
The Canadian legislation sets the regulations under which a company is not required to be licensed if it only has a role of an MSB intermediary or doing its activities in the process of the provision of other services that are the key activity of the company and for which it is reporting to its regulative institution.
During FINTRAC review of the license application, it is essential to demonstrate that an applicant possesses the necessary documentation and that the employees, intermediaries, and all other individuals approved to act from the entity’s side have great knowledge, and are able to efficiently implement all elements of the company compliance program.
If you are interested in obtaining a license, please contact our experts for consultation.
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