Canadian FMSB Registration (Foreign Money Services Business) for Cryptocurrency Businesses

Foreign Money Services Businesses (FMSBs) are similar to Money Service Businesses (MSBs); however, there are some key differences.

This article will explain the key criteria for a business to qualify as an FMSB in Canada and will outline the major compliance requirements for an FMSB.

TABLE OF CONTENTS

Who qualifies as an FMSB?

Qualification Requirements

Further clarity on qualification requirements

Summary of Compliance Requirements

Penalties for being non-compliant

Consult with a Lawyer to Obtain your MSB License

Who qualifies as an FMSB?

Qualification Requirements

Businesses will be considered an FMSB if all of the following criteria apply:

they are in the business of providing at least one money services business (MSB) service;
they do NOT have a place of business in Canada;
they direct MSB services at persons or entities in Canada; and
they provide MSB services to clients in Canada.

Further clarity on qualification requirements

Businesses are considered not to have a place of business in Canada when they:

are not incorporated in Canada;
have no physical location in Canada; or
have no employees, agents or branches in Canada.

Businesses will meet the requirements of directing services at persons or entities in Canada if the businesses do at least one of the following:

marketing or advertising that is directed at persons or entities located in Canada;
operating a “.ca” domain name; or
are listed in a Canadian business directory.

Summary of Compliance Requirements

In the list below, we have provided a summary of some of the major compliance requirements for FMSBs:

Compliance Program

Risk assessment guidance
Compliance program requirements

Know Your Client (KYC)

When to verify the identity of persons and entities
Methods to verify the identity of persons and entities
Business relationship requirements
Beneficial ownership requirements
Third party determination requirements
Politically exposed persons and heads of international organizations
Politically exposed persons and heads of international organizations guidance for non-account-based reporting entity sectors

Reporting

Suspicious transaction reports
Terrorist property reports
Large cash transaction reports
Large virtual currency transaction reports
Electronic funds transfer reports
24-hour rule

Record Keeping

Foreign money services businesses must keep certain records, including records related to transactions and client identification.

Travel Rule

Foreign money services businesses have travel rule requirements related to electronic funds transfers and virtual currency transfers.

Ministerial Directives

Ministerial directive requirements apply to all reporting entity sectors.

An FMSB’s reporting and recording procedures and policies should be part of comprehensive and carefully drafted policy and compliance documents that will meet all of Financial Transactions and Reports Analysis Centre of Canada’s (FINTRAC) requirements.

Penalties for being non-compliant

If your FMSB is found to be non-compliant with applicable Canadian laws and regulations, FINTRAC has the legislative authority to issue administrative monetary penalties (AMPs) to your business.

Consult with a Lawyer to Obtain your MSB License

Patrola Law is a reputable Canadian law firm that can assist Canadian and international businesses secure a Canada MSB license or FMSB license.

Our firm provides quick turn-around service and flat-fee quotes for services, eliminating unexpected or ‘surprise’ bills.

Please call us directly at (778) 565-4700 or simply fill out our contact form to schedule a free consultation.

The preceding content is for informational purposes only and does not constitute legal or professional advice. To obtain such advice, please contact our offices directly.