Canadian MSB Registration
The Most Cost-Effective Alternative to European Electronic Money Institutions (EMI) License
Are you a European entrepreneur seeking an efficient way to kickstart your fintech business? Navigating the complexities of acquiring an Electronic Money Institution (EMI) license in the EU can be arduous and time-consuming. Patrola Law offers you an expedited alternative: Canadian Money Services Business (MSB) registration. Discover how you can propel your fintech business forward with the streamlined process of Canadian MSB registration.
The EMI License Hurdle in Europe: A Time-Consuming Odyssey
Launching a fintech project necessitates permission or authorization to offer payment services. Acquiring an EMI license in any EU country or the UK can be an uphill battle, consuming more than a year and a half from inception to launch. The timeline can comprise roughly 3 to 4 months for document preparation, 9 to 15 months for regulatory authorization, and another 3 to 4 months to establish the fundamental payment infrastructure.
Given the lengthy and resource-intensive journey of EMI licensing in Europe, entrepreneurs often seek faster alternatives to kickstart their fintech ventures. Some businesses may explore the possibility of acting as an agent under a licensed BaaS (Banking as a Service) provider or registering as a small payment institution but these are not viable or ideal options for many businesses. Increasingly, companies around the world are pursuing a third, highly advantageous option – Canadian Money Services Business (MSB) registration.
Canadian MSB Registration: A Swift Entry for Fintech Companies
The Canadian MSB registration is not a "license" but rather a registration in a specialized business services register maintained by the Canadian regulator, FINTRAC (Financial Transactions and Reports Analysis Centre of Canada). FINTRAC is tasked with combating money laundering and terrorist financing activities in Canada by imposing specific obligations on registered MSBs, and regulating for compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) in Canada. It takes a few short months for most companies to register as a Money Services Business (MSB) or a Foreign Money Services Business (FMSB) with FINTRAC.
Money Services Business (MSB) and Foreign Money Services Business (FMSB)
A company qualifies as an MSB if it offers at least one money service to the public and has a place of business in Canada. The MSB services include foreign exchange dealing, remitting or transmitting funds, issuing or redeeming money orders, dealing in virtual currency, and crowdfunding platform services. A foreign company falls under FMSB if it offers money services, doesn't have a place of business in Canada, directs its services at individuals or entities in Canada, and provides these services to clients in Canada with connections to the country.
Benefits of Canadian MSB Registration
Faster to Obtain
The process of registering as a Canadian MSB is relatively quicker, generally allowing you to start your payment services business within 3 to 6 months from the date of application.
Flexibility in Service Scope
Canadian MSB registration permits you to offer both fiat and crypto transactions under the same application, providing operational flexibility without the need for separate licenses or registration.
Minimal Capital Requirements
There are no specific authorized capital requirements for a Canadian MSB, making it much more accessible for startups and businesses with limited resources.
Canada has an excellent reputation in the international marketplace. Canadian MSB registration is regulated by FINTRAC to ensure compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations, helping to maintain a secure and compliant business environment.
Canadian MSBs have more operational freedom and flexibility to provide various payment services without being limited to specific types of transactions.
Global Client Onboarding
You can onboard clients from various countries, offering a broader geographic reach and creating an international client base.
Canadian MSB vs. European EMI: A Side-By-Side Comparison
Canadian MSB Registration
European EMI License
For many businesses, opting for Canadian MSB registration presents a strategic advantage over pursuing a European EMI license. The Canadian process offers a quicker launch, allowing you to begin operations in a few, short months, as opposed to the lengthy timeline of EMI licensing. With simplified requirements, there is no need for high authorized capital, and a single Canadian MSB can allow businesses to offer both fiat and crypto services.
Additionally, the favorable regulatory environment and the accessibility to correspondent accounts in local credit unions further enhance business prospects for fintech companies. By choosing Canadian MSB registration with the guidance of Patrola Law, you're positioned for a faster, more efficient, and cost-effective journey into the world of fintech services.
Steps to Canadian MSB Registration
Gather necessary information about your business, compliance officer, incorporation, employees, and more
Prepare, complete and submit various forms and documents to FINTRAC
Wait for Confirmation
The confirmation letter will contain your registration number, expiry date, and instructions on how to renew your registration
Comply with the MSB regulations
Once you are registered, you need to follow the rules and obligations that apply to MSBs in Canada. These include reporting certain transactions, keeping records, verifying customer identity, implementing a compliance program, and undergoing audits
Embrace the Future of Fintech
Register as a Canadian MSB Now!
Consult with one of our expert MSB lawyers to guide you in every step of the process