Estonia
Latvia
Lithuania
Finland
Sweden
Norway
Poland
Czech Republic
Switzerland
Malta
Cyprus
Canada
Which one we recommend
If you serve clients in Canada, you need a FINTRAC registration. The only question is which entity holds it: your existing company abroad, as a foreign MSB, or a Canadian company, as a domestic MSB.
- Register your foreign company as an FMSB if Canada is a small add-on to an established business abroad, and you want to keep one entity.
- Use a Canadian company if Canada is a real market for you, you want Canadian banking and partners, or you are starting a new money services business. A new ready-made MSB gets you there in about 2 weeks.
For founders from Singapore, Hong Kong and the UK, we usually recommend the Canadian company: it gives you a Canadian registration and a Canadian entity to work with from day one, without depending on an agent for service.
Canadian MSB and foreign MSB: the legal difference
- Canadian (domestic) MSB: a business with a place of business in Canada that provides money services. Incorporation in Canada, a physical location, or employees, agents or branches in Canada all count as a place of business. A Canadian subsidiary of a foreign group is therefore a domestic MSB.
- Foreign MSB (FMSB): a business with no place of business in Canada that directs money services at people or businesses in Canada and provides those services to clients in Canada. Both conditions must be met.
The money services covered
- Foreign exchange dealing
- Remitting or transmitting funds, which also covers most payment services
- Dealing in virtual currency
- Issuing or redeeming money orders and traveller’s cheques
- Crowdfunding platform services, cheque cashing, armoured car and ATM acquiring services
When are you "directing services at Canada"?
This is where most foreign businesses get caught. FINTRAC treats any one of these as enough on its own:
- Marketing aimed at people or businesses in Canada
- A .ca domain
- A listing in a Canadian business directory
Other signs count together: prices in Canadian dollars, customer support for Canadian users, asking Canadian clients for feedback, or a Canadian business promoting your services. A client counts as being in Canada if they have ties such as a Canadian address, Canadian ID or a Canadian bank account or card. FINTRAC describes no "reverse solicitation" exception.
FINTRAC has fined large foreign crypto platforms for, among other things, failing to register as foreign MSBs, and published the penalties.
What each one has to do
The same for both
- A compliance programme: compliance officer, written policies, risk assessment, training and a review every two years
- Client identification, politically exposed person checks and the travel rule for transfers
- Suspicious transaction reports and the ministerial directives (for example on Russia, Iran and North Korea)
- Records kept for five years and provided to FINTRAC within 30 days when asked. There is no rule that they must be kept in Canada
- Registration renewed every two years
Only for a foreign MSB
- An agent for service in Canada: a Canadian-resident person authorised to accept notices. If the agent’s details change and FINTRAC is not told within 30 days, FINTRAC must revoke the registration.
- Canadian transactions only: large cash, international transfer and large virtual currency reports cover the transactions with Canadian clients.
- Banking check: Canadian banks may not open or keep accounts for a foreign MSB that is not registered.
The flip side: a Canadian MSB’s FINTRAC duties cover its money services business as a whole, not only its Canadian clients. If most of your clients are outside Canada, factor that into the choice.
Registering: the same process for both
Both use the same FINTRAC registration. It lists the owners, directors and CEO, the services, the bank accounts and the compliance officer, with criminal record checks for the CEO, president, directors and anyone owning 20% or more, issued no more than six months before the application and translated where needed. FINTRAC says most complete applications are processed within three months, with no separate figure for foreign MSBs.
Foreign MSBs and virtual currency dealers have a special date for their first renewal. After that, both renew every two years: see our guide to the 2-year renewal and effectiveness review.
RPAA and Quebec: the extra layers
A foreign payment company that directs payment services at Canada must also register with the Bank of Canada under the Retail Payment Activities Act, even if it is already a registered foreign MSB. See our guide to RPAA registration.
Quebec runs its own licence for money services businesses, issued by Revenu Québec, for businesses serving clients there. Check it early if Quebec clients are part of the plan.
How MAXCORP helps you choose
MAXCORP works with founders in Asia, the UK and Europe who want to serve Canadian clients. We look at where your clients are, what services you offer and how you bank, and tell you whether a foreign MSB registration or a Canadian company fits better.
For most, the quickest route is a new ready-made MSB: a FINTRAC-registered company with no activity, incorporated in British Columbia or Ontario, so no resident director or compliance officer is needed in Canada, transferred in about 2 weeks. See Canada MSB registration for both routes.
Official sources (7)
- Proceeds of Crime (Money Laundering) and Terrorist Financing Act, ss. 5, 5.1, 9.31, 11.12, 11.13
- PCMLTF Regulations (SOR/2002-184)
- PCMLTF Registration Regulations (SOR/2007-121)
- FINTRAC: money services businesses and foreign money services businesses
- FINTRAC: MSB registration
- FINTRAC: public notices of administrative monetary penalties
- Retail Payment Activities Act, s. 5
General information only, not legal or tax advice. Rules change; ask us about your case.