MSB License in Canada (Money Service Business) is an official document that allows companies to provide various financial services such as money transfers, currency exchange, and virtual asset operations. To obtain this license, it is necessary to comply with the regulatory requirements of FINTRAC aimed at ensuring financial transparency and minimizing fraud-related risks.
Today, the Canadian financial system is considered one of the most reliable in the world, and in 2020 Canada ranked among the top ten most stable economies, taking 9th place.
Undoubtedly, the financial sector relies on the operations of banks, financial institutions, and payment systems. Instead of setting unattainable requirements, the Canadian regulator has introduced clear rules and criteria to enable companies to operate in the financial sector and provide such services. One of these opportunities is the MSB (Money Service Business) license, which allows companies to offer services not only to Canadians but also to clients worldwide.
Canada is one of the most recognizable jurisdictions in the world and one of the leading countries in the field of e-commerce and finance. Payment institutions such as WISE, PAYSEND, WIREXEND, PAXUM, and many others have chosen the MSB license for their high-tech business operations.
Canadian legislation on anti-money laundering and counter-terrorist financing (“AML/CTF”), the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (“PCMLTFA”), and related regulations apply to certain legal entities, including “money services businesses.” Under the PCMLTFA, an MSB is defined as “a person or entity that engages in:
- foreign exchange dealing;
- remitting or transmitting funds by any means or through any individual, legal entity, or electronic funds transfer network;
- issuing or redeeming money orders, traveler’s cheques, or other similar negotiable instruments, excluding cheques payable to a named person or entity.”
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) develops and publishes guidelines, recommendations, and other instructions on which businesses FINTRAC qualifies as MSBs.
What is an MSB License and Why Is It Needed
First and foremost, it's important to understand that providing financial services in Canada and other countries requires special authorization—in our case, the MSB license. This license is issued by a special authority—the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), which regulates financial and cryptocurrency institutions.
An MSB license allows a company to legally engage in the following activities:
- Currency exchange;
- Money transfers. A transfer can be made by an individual or company to another individual or company by any means, including electronically;
- Issuing or redeeming money orders, traveler’s cheques, or other similar negotiable instruments;
- Trading in virtual currency, exchanging, sending, and receiving virtual assets.
*According to FINTRAC’s guidelines, virtual currency-related activities include exchanging funds for virtual currency, exchanging one virtual currency for another, or exchanging virtual currency for fiat. Transfer services include transferring virtual currency at the client’s request or receiving virtual currency for subsequent transfer to the recipient.
What Documents and Information Are Required to Obtain an MSB License in Canada
Before submitting an application for an MSB license in Canada, we ask clients to provide the following documents and information:
- Company details – name, structure. If the client does not yet have a company for which they want to obtain a Money Service Business license in Canada, we will assist in registering such a company before the license application.
- Shareholders and directors information – passport, proof of address, email, phone number.
- Proof of source of funds – bank statements, tax authority letters, audited financial reports.
- A business plan with detailed operational description (we assist in preparation).
- An internal or outsourced qualified AML Compliance Officer. If needed, we can provide an outsourced AML Compliance Officer service for the Canadian MSB.
- The business activities the company plans to carry out with the MSB license – fiat currency exchange, cryptocurrency exchange, funds transfers, payment service provider (PSP) operations.
- Documents required for RPAA (Retail Payment Activities Act) compliance – financial flows, process diagrams, contract examples. We assist in preparing these documents.
- Regulator questionnaire – the applicant must respond to questions regarding the business, jurisdictions, and compliance framework.
Cost of Services for Obtaining an MSB License in Canada
Service package for obtaining an MSB license in Canada:
| Service | Cost (in EUR) |
|---|---|
| MSB license in Canada: | 17600 |
| - Preparation and submission of MSB application to FINTRAC | included |
| - Communication support with FINTRAC, responding to requests | included |
| - Assistance with business plan preparation | included |
| - Consulting on corporate structure and operational readiness | included |
| - Drafts of internal company policies | included |
| - Nominee director services | included |
| Company registration in Canada (British Columbia, Ontario or Alberta): | included |
| - Name reservation | included |
| - Government fees | included |
| - Legal address | included |
| Registration under RPAA (Retail Payment Activities Act): | included |
| - Payment of 2500 CAD government fee | included |
| - PSP connect setup | included |
| - Business plan submission | included |
| - Submission of documentation on payment functions | included |
| - Submission of draft client contracts | included |
| - Submission of process diagrams | included |
| - Communication with the Bank of Canada, responding to calls | included |
| - Submission of additional documents for registration with the Bank of Canada | included |
| Canadian representative (for non-resident companies) | 6000 |
Service package for ongoing support and license renewal from the second year:
| Service | Cost (in EUR) |
|---|---|
| MSB license renewal from the second year: | 13500 |
| - Annual renewal of Canadian company and MSB license | included |
| - Annual company statistical report (Annual Report) | included |
| - Legal address | included |
| - Compliance and RPAA reporting assistance | included |
| Canadian representative (for non-resident companies) | 3500 |
| Accounting, financial reporting preparation and submission | cost discussed separately |
| Optional services: | Cost (in EUR) |
| AML/CTF and KYC compliance program | 3.8 |
| Bank account application submission | 4000 |
| Bookkeeping services | 90/hour |
| Tax reporting submission | 3000 |
| AML officer | from 900/month |
| Nominee director services (if provided separately from the package) | from 4,800 |
| Nominee shareholder services | from 4,000 |
Company Obligations When Obtaining an MSB License in Canada
A company wishing to obtain MSB status must:
- Register with FINTRAC;
- Develop and implement an AML/CTF compliance program;
- Comply with customer identification (KYC) requirements, record keeping, and reporting obligations.
Step-by-Step Guide: How to Register with FINTRAC?
As previously mentioned, FINTRAC is the authority responsible for issuing or refusing licenses in Canada. To successfully pass the review by this body, the following steps must be taken:
- Undergo a preliminary check (pre-check) with the Financial Transactions and Reports Analysis Centre of Canada. This requires providing the Centre with the corporation's name, actual address, full contact details of the company's representative, and of course, the types of services the company plans to provide.
- Initiate the registration procedure with the Financial Transactions and Reports Analysis Centre of Canada. This stage involves submitting information about the company’s bank account, compliance officer, and total staff count. Information about the company’s incorporation, as well as details on the director and anyone owning more than 20% of the shares, must also be provided. FINTRAC will additionally request an estimate of the projected annual transfer volume for each service type (in CAD) and detailed data about each MSB agent.
How to Comply with AML/CTF Requirements?
Globally, there is an ongoing fight against money laundering, which is why regulatory bodies must be aware of the legitimacy and transparency of business activities. In Canada, as elsewhere, AML/CTF (Anti-money laundering / Combating the financing of terrorism) rules apply and must be followed.
In Canada, the compliance program typically includes 5 components:
- The company must appoint a compliance officer. This individual is responsible for developing and maintaining the Canadian AML/CTF program. The specialist can be located anywhere in the world—not necessarily in Canada. They also ensure implementation of legislative and regulatory requirements;
- Assess, document, and evaluate risks, including measures and strategies to mitigate them. The document should describe and evaluate the risk of the company’s business being used for money laundering;
- Develop and implement written compliance policies and procedures that align with legal requirements and are approved by senior management. Employee responsibilities under the regulatory framework should also be defined;
- Create and conduct a written training program for employees, agents, and other individuals authorized to act on behalf of the MSB. The program must include training materials and testing to verify the participants' understanding of their roles and obligations;
- Review the program every two years for compliance with AML/CTF policy and assess its effectiveness. All procedures, rules, risk assessments, and staff knowledge must be reviewed to ensure the program's continued legal adequacy and effectiveness.
What is KYC and How to Comply with Its Requirements?
KYC stands for "know your client" and means that every institution or agent must ensure the legitimacy and transparency of their client’s business. This information is usually gathered through questionnaires and direct responses.
When obtaining an MSB license, the KYC process includes:
- Collecting and processing identifying information about the company and its director;
- Monitoring and reporting unusual or suspicious transactions to the appropriate authorities;
- Complying with all licensing requirements;
- Maintaining company records.
Why Choose Taxters?
Taxters has been operating for over 10 years in the field of company incorporation and support worldwide, opening accounts in banking and payment systems, and providing services to private individuals—from real estate transactions to consulting on tax residency exit strategies.
As part of our MSB license service package, we:
- Advise you on the step-by-step process of obtaining the license;
- Prepare all required documents;
- Represent your interests before regulatory authorities at all stages of the licensing process, including interviews with FINTRAC.
Contact us by any convenient method, and we’ll help you with everything—from registering a new company to obtaining a license for it!
FAQ
What is the estimated time frame for obtaining an MSB license?
Approximately 3 months.
How many directors/shareholders are required if I decide to set up a company to obtain the license? It is recommended to appoint two directors: the first director should have experience in finance/payments; the second director should be responsible for compliance and have experience in AML. Both directors can be non-residents.
It is recommended to appoint two directors: the first director should have experience in finance/payments; the second director should be responsible for ensuring regulatory compliance and have experience in AML. Both directors can be non-residents.
Which currencies can be used?
Any currency is allowed; currency conversion is permitted.
Is personal presence required during the licensing process?
No, the entire process is conducted remotely.
