If you are a money services business (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, identifying your clients, and having a compliance regime. To begin the MSB registration process, please complete and submit the Pre-registration form.
Who is a money services business (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 (USD$ for CAD$) for another.
See examples where purchases made with foreign currency are not considered a foreign exchange.
- 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.
- 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 foreign currency exchange. However, the amount given for the other $50 would be considered a foreign currency exchange.
- Transferring funds from one individual or organization to another using an electronic funds transfer network or any other method such as hawala, hundi, fei ch'ien, and chit.
Cashing or selling money orders, traveller's cheques or anything similar
- This may also include cashing or selling traveller's cheque or anything similar. This does not include cashing cheques made out to a particular individual or organization.
Who is not a money services business (MSB)?
You are not an MSB if:
- You offer one or more MSB services strictly as an agent for an MSB. It is the MSB for which you are an agent that has to register with us.
- You offer one or more MSB services as part of other activities for which you are a reporting entity.
See examples of who is not an MSB.
- 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.
- A securities dealer from ABC Investment Advisors Inc. receives funds from his 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 securities dealer's activities are already covered under his obligations as a reporting entity.
Register your money services business (MSB)
Before beginning to operate in Canada, you must register your money services business (MSB) with FINTRAC. Even if you are registered as an MSB with a province or territory, you still have to register with us. For all your MSB registration obligations, see Register your money services business.
A comprehensive and effective compliance program is the basis of meeting all of your obligations under the PCMLTFA and associated Regulations. During a FINTRAC examination, it is important to demonstrate that the required documentation is in place and that employees, agents, and all others authorized to act on your behalf are well trained and can effectively implement all the elements of your compliance program. A senior officer must approve the compliance program and the compliance officer must have the necessary authority to carry out the requirements of the program. You must:
- Appoint a compliance officer responsible for the implementation and oversight of the compliance program;
- Develop and apply written compliance policies and procedures that are kept up to date and approved by a senior officer;
- Apply and document a risk assessment , including mitigation measures and strategies;
- Develop and maintain a written training program for employees, agents, and others authorized to act on your behalf;
- Review your compliance program (policies and procedures, risk assessment and training program) every two years for the purpose of testing its effectiveness.
See Guideline 4: Implementation of a compliance regime, the Risk-based approach guide and the Risk-based approach workbook for MSBs for more information on these obligations.
Know your client
As a money services business, you must verify the identity of clients for certain activities and transactions according to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR). Part of knowing your client includes following the methods to identify clients, as well as conducting certain additional activities as listed below:
- When to identify individuals and confirm the existence of entities – Money services businesses;
- Methods to identify individuals and confirm the existence of entities;
- Business relationship requirements;
- Ongoing monitoring requirements;
- Beneficial ownership requirements;
- Third party determination requirements; and
- Politically exposed persons and heads of international organizations – Money services businesses.
Money services businesses are required to complete reports about certain transactions and property and submit them to FINTRAC. Financial transaction reports are critical to FINTRAC’s ability to analyze transactions in order to develop financial intelligence that is disclosed to law enforcement and partner agencies. Therefore, the quality of your reporting will be reviewed by FINTRAC in examinations.
Suspicious transactions: Within 30 days of determining that there are reasonable grounds to suspect that a transaction or an attempted transaction is related to the commission or attempted commission of a money laundering or terrorist activity financing offence, you must submit a report. See Guideline 2: Suspicious transactions, Guideline 3A: Submitting Suspicious Transaction Reports to FINTRAC electronically and Guideline 3B: Submitting Suspicious Transaction Reports to FINTRAC by paper.
Terrorist property: When you know that property in your possession or under your control is owned, controlled by or on behalf of a terrorist or a terrorist group, you must submit a report. You must also submit a report to the Royal Canadian Mounted Police (RCMP) and the Canadian Security Intelligence Service (CSIS). See Guideline 5: Submitting Terrorist Property Reports.
Large cash transactions: When you receive $10,000 CAD or more in cash either in a single transaction or in multiple transactions within a 24-hour period, you must submit a report within 15 calendar days. See Guideline 7A: Submitting Large Cash Transaction Reports to FINTRAC electronically and Guideline 7B: Submitting Large Cash Transaction Reports to FINTRAC by paper.
Electronic funds transfers: When you send or receive client-initiated instructions to transfer $10,000 CAD or more internationally; either in a single transaction or in multiple transactions within a 24-hour period, you must submit a report within 5 business days. See Guideline 8A: Submitting non-SWIFT Electronic Funds Transfer Reports to FINTRAC electronically, Guideline 8B: Submitting SWIFT Electronic Funds Transfer Reports to FINTRAC and Guideline 8C: Submitting non-SWIFT Electronic Funds Transfer Reports to FINTRAC by paper.
If you have a computer and an internet connection, you must submit all reports to FINTRAC electronically, except Terrorist Property reports, which can only be submitted on paper.
You are responsible for keeping certain transaction and client identification records. These records are to be kept in such a way that they can be provided to FINTRAC within 30 days if required to do so. See Record keeping for money services businesses for details.
If you do not meet all of these obligations, you may be assessed penalties or incur other consequences.
FINTRAC has created a Guidance glossary that defines certain terms used throughout its guidance documents.
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