Having an MSB license in Canada is a prerequisite and an important step for any fintech startup or financial service provider who wishes to operate legally within the confines of the Canadian territory. This registration with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is mandatory, whereas the other licenses serve as a legal means against illicit financial operations.
This is a handy, step-by-step tutorial to the entire process, which finally puts an end to the age-old query: “How do I get an MSB license in Canada?”
Step 1: Understand What a MSB License Is and Who Needs It
Before you begin, it’s essential to clarify “what is a MSB license.” An MSB is a business that provides one or more of the following services to the public:
- Foreign exchange dealing
- Money transfers (remitting or transmitting funds)
- Issuing or redeeming money orders
- Trading in virtual money (cryptocurrency exchanges and transfers)
If your company offers any of these services, you are required to register with FINTRAC prior to commencing business. This is a requirement for both businesses based in Canada and international businesses who channel their services to clients in Canada (referred to as Foreign MSBs, or FMSBs).
Start Your Application: Ready to get your MSB license? We’ll guide you through every step.
Step 2: Prepare Your Business and Documentation
This is the preliminary phase of your application and quite possibly the most important. A successful application depends on careful preparation.
- Incorporate Your Company: Your company should be a duly incorporated Canadian entity.
- Name a Compliance Officer: You need to name an individual who will serve as your Compliance Officer.
- compliance and licensing framework. It is highly recommended this individual has experience with Canadian AML regulations.
- Gather Key Information: You will need to collect detailed information about your business, including:
- Company incorporation details.
- Information about directors and anyone who owns or controls 20% or more of the company.
- Estimated annual transaction volumes for each service.
- Details about your bank accounts and physical business locations (if any).
- Criminal record checks for key individuals.
Step 3: Develop a Robust AML Compliance Program
FINTRAC will not approve your registration if you do not have a comprehensive AML (Anti-Money Laundering) and ATF (Anti-Terrorist Financing) compliance program. This program is the heart of your MSB Canada license. It must be documented in writing and include:
- Hiring a Compliance Officer: As described earlier, a specific individual is needed.
- Written Policies and Procedures: A handbook that defines your record-keeping rules, identity verification, and suspicious transactions reporting.
- Risk Assessment: A written analysis of the risk your business is exposed to from money laundering and how you intend to address them.
- Training Program: An initiative to educate all the concerned employees on their compliance responsibility.
- Effectiveness Review: A cycle to review and revise your program regularly to keep it effective.
Step 4: The FINTRAC Registration Process
The registration itself is a multi-step online process.
- Pre-Registration Request: Start by completing the FINTRAC Pre-registration form. This form details your business structure, the services you will offer, and your contact information.
- Registration Form: Once your pre-registration request has been confirmed by FINTRAC, a compliance officer will call you and give you access to the complete form of registration. In this step, you’ll enter all the detailed information and files you prepared earlier.
- Clarification Requests: FINTRAC can request further information or clarifications. Accurate and timely responses to such requests are critical to a seamless process.
Step 5: Understanding the Timeline and Cost
The time frame for granting an MSB license is not specific in Canada. Some applicants have completed the entire process from pre-registration to approval in a few weeks while most will take considerably longer or even a couple of months, depending on the complex nature of the application and how fast one will respond to queries raised by FINTRAC.
Speaking on the cost of an MSB license in Canada, it would be very important to note that FINTRAC does not require a direct registration fee. Costs incurred are usually through professional legal and consulting fees such as incorporations, compliance program development, along with software subscriptions for Antimony Laundering (AML) compliance purposes.
Conclusion
Getting an MSB license in Canada speaks for your business commitment to security and transparency. In respect to that, the process may be very detail-oriented and requires loads of compliance investment; however, it provides a legal background to operate and grow with confidence within the financial sector of Canada.
Start Your Journey: Our step-by-step guide is the perfect place to begin.
