Operating a Money Services Business (MSB) in Canada means adhering to strict compliance obligations set by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). This step-by-step guide outlines everything you need to know to legally register and maintain an MSB, including eligibility, documentation, compliance requirements, and the importance of a physical presence in Canada.
Step 1: Determine Eligibility
Under Canadian law, businesses must register as an MSB if they engage in one or more of the following:
- Foreign exchange dealing
- Remittance or money transferring
- Issuing or redeeming money orders, traveler’s cheques, or similar instruments
- Dealing in virtual currency (buying, selling, or transferring)
If your business performs any of these services for clients in Canada, MSB registration is mandatory.
Step 2: Ensure a Physical Presence in Canada
To be eligible for registration, you must have a physical office located in Canada. According to FINTRAC, this requirement is non-negotiable and is essential to demonstrate that your MSB has an operational footprint within the country.
✅ Acceptable forms of physical presence:
- A staffed, dedicated office space in Canada
- Employees or agents operating from within Canada
- A Canadian-registered corporation with local operations
❌ Unacceptable alternatives:
- Virtual offices without full-time staff
- Mail forwarding addresses
- Solely foreign entities with no operational base in Canada
Step 3: Build a FINTRAC-Compliant AML Program
Before registration, MSBs must implement a robust Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) program, which must include:
- A written risk assessment tailored to your services and clients
- Detailed compliance policies and procedures
- A designated Compliance Officer
- Employee training on AML/CTF obligations
- An independent review of the program at least every two years
This program forms the core of your ongoing obligations after registration.
Step 4: Gather Required Documentation
Be prepared to submit:
- Corporate registration documents
- Description of MSB services and delivery methods
- Details on ownership and beneficial ownership
- AML/CTF compliance manual
- Proof of a physical business address in Canada
- Identification documents for directors and officers
Step 5: Register with FINTRAC
You can register through FINTRAC’s online MSB portal. Once submitted, applications are typically reviewed within 6 to 8 weeks. FINTRAC may follow up with requests for additional clarification or documentation, especially concerning the physical office requirement and AML readiness.
Step 6: Maintain Ongoing Compliance
After registration, your business must continue to meet key regulatory obligations:
- Submit Suspicious Transaction Reports (STRs), Large Cash Transaction Reports (LCTRs), and other reports
- Retain transaction records for at least five years
- Conduct periodic independent AML reviews
- Update FINTRAC of any business changes within 30 days
- Keep your compliance program and staff training up-to-date
Failure to maintain compliance can lead to administrative monetary penalties (AMPs), reputational damage, or suspension of your license.
Conclusion
Registering as an MSB in Canada is a structured and detailed process—but one that can be managed efficiently with the right preparation. The most critical points are to establish a real physical office in Canada and implement a comprehensive AML program. Businesses that meet these core requirements can not only obtain an MSB license but also stay audit-ready year-round.
Frequently Asked Questions
Q1: Is a physical office in Canada mandatory for MSBs?
Yes, a staffed, operational office located within Canada is a mandatory requirement for MSB registration with FINTRAC.
Q2: How long does the MSB registration process take?
Typically, 6 to 8 weeks if all documents and compliance procedures are in order. During the last year, FINTRAC experienced significant delays. Always clarify the EDT with your service provider before applying.
Q3: What happens if I operate as an MSB without registration?
You may face enforcement action by FINTRAC, including administrative monetary penalties (AMPs) exceeding $500,000 and potential criminal charges.