Money services businesses

Money services businesses (MSBs) must fulfill specific obligations as required by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations, to help combat money laundering and terrorist activity financing in Canada.

If you do not have a place of business in Canada, see Foreign money services businesses.

If you are unsure, see The difference between money services businesses and foreign money services businesses.

If you are an MSB, you need to know about all the obligations that apply to you. This includes registering your business with us, reporting to us, keeping records, knowing your clients, and having a compliance program. To begin the MSB registration process, please complete and submit the Pre-registration form.

Who is an MSB?

You are an MSB if you are in business in Canada to offer any of the following services to the public:

Foreign exchange dealing

— Conducting transactions where you exchange one type of currency for another (for example, exchanging USD for CAD).

However, purchases made with foreign currency are not considered foreign transactions. For example:

  1. Diana pays for gas and a chocolate bar using a $100 US bill. She asks that her change be given to her in Canadian dollars. This would not be considered a foreign currency exchange transaction.
  2. Esther pays for a $20 book using a $50 US bill and a $50 US traveller's cheque. She asks that her change be given to her in Canadian dollars. The change given for one of the $50 is not considered a foreign currency exchange. However, the amount given for the other $50 would be considered a foreign currency exchange.

Money transferring

— Transferring funds from one person or entity to another using an electronic funds transfer network or any other method such as Hawala, Hundi, Fei ch'ien, and Chitti.

Issuing or redeeming money orders, traveller's cheques or anything similar

— Your business issues or redeems money orders, travellers' cheques or other similar negotiable instruments. This does not include cashing cheques made out to a particular person or entity. 

ISSUING

To offer your own business's money orders or travellers cheques.

REDEEMING

To repurchase your own business's money orders or traveller's cheques by returning the purchase price to the buyer.

SELLING OR CASHING

To exclusively sell or cash the money orders or traveller's cheques of another business that issued the money order or traveller's cheque, does not make you an MSB.

Dealing in virtual currency

— This includes both virtual currency exchange and virtual currency transfer services.

  1. Virtual currency exchange services include exchanging:
    • funds for virtual currency,
    • virtual currency for funds, or
    • virtual currency for another virtual currency.
  2. Virtual currency transfer services include:
    • transferring virtual currency at the request of a client, or
    • receiving a transfer of virtual currency for remittance to a beneficiary.

You are also considered an MSB if:

Who is not an MSB?

You are not an MSB if:

See examples of who is not an MSB.

  1. Darren transfers funds as an agent of Money Transfer Inc. He also uses Money Transfer Inc.'s sign to advertise. Although Darren offers and advertises this service, he is not an MSB. It is Money Transfer Inc. that is the MSB.
  2. A securities dealer from ABC Investment Advisors Inc. receives funds from this client in Euros to buy Canadian securities. Although one type of money is exchanged for another, this would not be considered an MSB service because the ABC investment Advisors Inc. is carrying out the MSB activity in the course of providing investment services as a securities dealer.

Your requirements

Register your MSB

Before beginning to operate in Canada, you must register your MSB with FINTRAC. Even if you are registered as an MSB with a province or territory, you still have to register with FINTRAC. For all your MSB registration obligations, see Register your money services business.

*Note: On June 1, 2021, regulatory amendments, which will create or change obligations for all reporting entities (REs) subject to the PCMLTFA and associated Regulations, will come into force. FINTRAC expects that REs will comply with the amended Regulations, but will exercise flexibility in assessing and enforcing compliance with certain record keeping and reporting requirements. See the Notice on forthcoming regulatory amendments and flexibility for more information. 

Related topics

Search for MSBs

Search our online list of registered MSBs. Use the search page called Money services business (MSB) registry search.

FINTRAC questions or examinations

To make sure that you are fulfilling your obligations, FINTRAC can ask you questions about your entity, and to provide certain records. For more information, see FINTRAC examinations: your responsibilities and what you can expect from FINTRAC.

Table 1—Summary of requirements for money services businesses
Category of requirement under the PCMLTFA and associated Regulations Requirements
Compliance program

Money services businesses must implement a compliance program. A strong compliance program will form the basis of meeting all of your regulatory requirements. For more information, see Compliance program requirements and the Risk assessment guidance.

Know your client

Money services businesses must verify the identity of persons and entities for certain activities and transactions, and carry out other customer due diligence activities, as described below:

When to verify the identity of persons and entities
Money services businesses must verify the identity of persons and entities for certain transactions and activities. For more information, see When to verify the identity of persons and entities – Money services businesses and foreign money services businesses.

Methods to verify the identity of persons and entities
Money services businesses must verify the identity of persons and entities using the methods prescribed by the PCMLTFA and associated Regulations. For more information, see Methods to verify the identity of persons and entities.

Business relationship requirements
Money services businesses enter into a business relationship with a client the second time they are required to verify the identity of that client or when they enter into a service agreement with a client that is an entity to provide an MSB service. For more information, see Business relationship requirements.

Ongoing monitoring requirements
Money services businesses have ongoing monitoring requirements when they enter into a business relationship with a client. For more information, see Ongoing monitoring requirements.

Beneficial ownership requirements
Money services businesses must obtain and take reasonable measures to confirm the accuracy of beneficial ownership information for entities. For more information, see Beneficial ownership requirements.

Third party determination requirements
Money services businesses have third party determination requirements when they are required to submit certain reports and keep certain records. For more information, see Third party determination requirements.

Politically exposed persons (PEP) and heads of international organizations (HIO) requirements
Money services businesses are required to take reasonable measures to make PEP and HIO determinations for certain activities or transactions. If a money services business determines that a person is a PEP or a HIO then they have additional related requirements. For more information, see Politically exposed persons and heads of international organizations guidance and Politically exposed persons and heads of international organizations guidance for non-account based reporting entity sectors.

Reporting

Money services businesses must submit the following reports to FINTRAC:

Suspicious transaction reports
For more information, see:

Terrorist property reports  
For more information, see:

Large cash transaction reports 
For more information, see:

Large virtual currency transaction reports 
For more information, see:

Electronic funds transfer reports 
For more information, see:

24-hour rule

Money services businesses have 24-hour rule requirements for large cash transaction reports, large virtual currency transaction reports, and incoming or outgoing electronic funds transfer reports. For more information, see Transaction reporting guidance: the 24-hour rule.

Record Keeping

Money services businesses must keep certain records, including records related to transactions and client identification. For more information, see Record keeping requirements for money services businesses and foreign money services businesses.

Travel rule

Money services businesses have travel rule requirements related to electronic funds transfers and virtual currency transfers. For more information, see Travel rule for electronic funds and virtual currency transfers.

Ministerial directives

Ministerial directive requirements apply to all reporting entity sectors. For more information, see Ministerial directives and transaction restrictions.

Penalties for non-compliance

FINTRAC has the legislative authority to issue administrative monetary penalties (AMPs) to reporting entities that are found to be non-compliant with the PCMLTFA and associated Regulations. For more information, see Penalties for non-compliance.

Glossary

The FINTRAC Guidance glossary includes terminology defined in the PCMLTFA and associated Regulations, as well as terms used throughout the guidance. For more information, see FINTRAC's Guidance Glossary.

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