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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.

There are two types of MSBs that must fulfill obligations under the PCMLTFA: Canadian money services businesses and Foreign money services businesses. Information applicable to each type of money services business is presented on separate tabs. When there are no tabs, the information is applicable to both types. If you are unsure whether you are an MSB or an FMSB, you can answer a few questions on this page:

Check to see if you need to register with FINTRAC as an MSB or FMSB

Who is an MSB?

  1. You offer at least one money services business (MSB) service to the public
  2. You have a place of business in Canada
Detailed explanation of the criteria

1. You offer one or more 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.

Remitting or transmitting funds

Remitting or transmitting 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.

This includes remitting or transmitting funds (as instructed by your clients) carried out by means of a credit/debit card if the beneficiary has an agreement with the payment service provider that permits payment by that means for the provision of goods and services.


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.

  • Virtual currency exchange services include exchanging:
    • funds for virtual currency,
    • virtual currency for funds, or
    • virtual currency for another virtual currency.
  • 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.

Crowdfunding platform services

You provide and maintain a crowdfunding platform for use by other persons or entities to raise funds or virtual currency.


2. You have a place of business in Canada:

  • You are incorporated in Canada;
  • You have a physical location in Canada; or,
  • You have employees, agents or branches in Canada.

You are also considered an MSB if:

  • You hold a permit or licence related to any of the above-mentioned services.
  • You are registered as someone offering any of the above-mentioned services.
  • You advertise (by any means, including newspaper, television, Yellow Pages, internet, any other media, or by an interior or exterior sign) that you engage in any of the above-mentioned services.
  • You do not advertise any MSB services, but you:
    • offer money transfer services in any amount;
    • conduct foreign exchange transactions for more than $1,000 during a single transaction with the same person or entity. For these purposes, a single transaction is defined as two or more transactions related to a foreign exchange transaction of less than $1,000 each that are made within 24 consecutive hours and that total $1,000 or more; or
    • issue or redeem money orders, traveller's cheques or other similar negotiable instruments for more than $1,000 during a single transaction with the same person or entity. For these purposes, a single transaction is defined as two or more transactions related to the redemption of money orders, travellers' cheques or other similar negotiable instruments of less than $1,000 each that are made within 24 consecutive hours and that total $1,000 or more.
  • You report the income of any of the above-mentioned services as income from a separate business for tax purposes.

Who is an FMSB?

Foreign money services businesses submitting Electronic Funds Transfer Reports through FINTRAC web reporting need to apply an interim measure because of a technical issue. Other reporting entity sectors are not affected.

You are considered a foreign money services business (FMSB) if all of the following criteria apply:

  1. You are engaged in the business of providing at least one money services business (MSB) service;
  2. You do not have a place of business in Canada;
  3. You direct your MSB services at persons or entities in Canada; and
  4. You provide these services to clients in Canada.
Detailed explanation of the criteria

1. You are engaged in the business of providing at least one MSB service

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.

Remitting or transmitting funds

Remitting or transmitting 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.

This includes remitting or transmitting funds (as instructed by your clients) carried out by means of a credit/debit card if the beneficiary has an agreement with the payment service provider that permits payment by that means for the provision of goods and services.


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 money orders or traveller's cheques issued by another business does not make you an MSB.

Dealing in virtual currency

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

  • Virtual currency exchange services include exchanging:
    • funds for virtual currency,
    • virtual currency for funds, or
    • virtual currency for another virtual currency.
  • 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.

Crowdfunding platform services

You provide and maintain a crowdfunding platform for use by other persons or entities to raise funds or virtual currency.


2. You do not have a place of business in Canada

To not have a place of business in Canada means:

  • You are not incorporated in Canada;
  • You do not have a physical location in Canada; or
  • You do not have employees, agents or branches in Canada.

Note: If you provide MSB services and have a place of business in Canada, then you may be considered an MSB. Please see Who is an MSB tab for additional information.


3. You direct services at persons or entities in Canada

A business is directing services at persons or entities in Canada if at least one of the following applies:

  • The business's marketing or advertising is directed at persons or entities located in Canada;
  • The business operates a ".ca" domain name; or
  • The business is listed in a Canadian business directory.

Examples of "directing services" at persons or entities in Canada:

  1. Company A is based in Australia but advertises its online money transfer and exchange services in Canadian newspapers and on websites aimed at clients in Canada who want to transfer or exchange money online. This would constitute directing services at persons or entities in Canada.
  2. Company B is based in France, but sends emails to clients in Canada, promoting its foreign exchange services. This would constitute directing services at persons or entities in Canada.

If none of the above apply to you, it is still possible that you are directing services at persons or entities in Canada. A combination of additional criteria may be considered in order to make this determination.

The following list provides examples of additional criteria that may be considered when determining whether you "direct services at persons or entities in Canada". This is not an exhaustive list.

  • Describing your services as being offered in Canada.
  • Offering products or services in Canadian dollars.
  • Customer service support is available to clients in Canada.
  • If you seek feedback from your clients in Canada.
  • Having another business in Canada promote your services to clients in Canada.

4. You provide these services to clients in Canada

A client is deemed to be "in Canada" if they have a connection or residential ties with Canada.

You can determine if your client is "in Canada" based on the information you acquire through your interactions with them, such as when verifying their identity. The client is "in Canada" when:

  • the client's address is in Canada;
  • the document or information used to verify the client's identity is issued by a Canadian province or territory, or by the federal government; or
  • the client's banking, credit card or payment processing service is based in Canada.

Note: An individual may be deemed to be "in Canada" when they are temporarily living, attending school, working, or vacationing outside of Canada.

Please address questions about FMSBs to guidelines-lignesdirectrices@fintrac-canafe.gc.ca.

Who is not an MSB or FMSB?

You are not an MSB or FMSB if:

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.

*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. 

Summary of requirements for money services businesses

Register with FINTRAC

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. FINTRAC does not charge registration fees.

Certain persons or entities are not eligible to register and therefore cannot operate an MSB or FMSB.

Compliance program

Money services businesses must implement a compliance program. A strong compliance program will form the basis of meeting all your regulatory requirements.

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 or entities for certain transactions and activities.

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.


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 in Canada to provide an MSB service.


Ongoing monitoring requirements

Money services businesses have ongoing monitoring requirements when they enter into a business relationship with a client.


Beneficial ownership requirements

Money services businesses must obtain and take reasonable measures to confirm the accuracy of beneficial ownership information for entities.


Third party determination requirements

Money services businesses have third party determination requirements when they are required to submit certain reports and keep certain records.


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.

Reporting

Money services businesses must submit the following reports to FINTRAC:


Terrorist property reports



Large virtual currency transaction reports



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.

Record Keeping

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

Travel rule

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.

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.

Date Modified: