MSB Licence in Canada: How to Get It, What It Covers and What It Costs

If you are setting up a payment, remittance or crypto business and Canada is on your shortlist, the MSB licence is the authorisation you will need, and it is one of the most accessible in the developed world. Issued through FINTRAC, it covers money transfers, currency exchange and crypto services under one licence, with no capital requirement, no government fee and no residency rule for directors. Banks, payment partners and liquidity providers recognise it as a licensed, supervised status in a FATF-member country, and the rules behind it are published in FINTRAC’s guidance for money services businesses.

Eesti Firma advises fintech and crypto companies on licensing in Europe and Canada, and the questions below are the ones every project starts with: what the licence covers, who needs it, what FINTRAC asks for, how long it takes, what it costs and what the company has to do once it is licensed. If you would rather talk your case through than read, get in touch for a consultation; the guide is here either way.

Why choose a Canadian MSB licence: advantages and what to keep in mind

The Canadian MSB licence has become a common first licence for payment and crypto start-ups. Its entry conditions are among the lightest in any FATF-member jurisdiction. The points in the right-hand column are worth knowing before incorporation rather than after.

What the MSB licence covers: the eight money services

The list of licensable services is closed and comes from Canada’s anti-money-laundering law, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), and its regulations. A company is licensed for the categories it actually provides, and those categories appear on its public registry entry.

A company can hold the licence for several categories at once, so a business that transfers money, exchanges currencies and deals in crypto needs one licence, not three. The same eight categories apply to foreign MSBs. A business that only acts as an agent of a licensed MSB does not need its own licence; the principal holds it.

Who needs an MSB licence in Canada: Canadian MSB or foreign MSB

Under the PCMLTFA a money services business is a “reporting entity”, in the same category as banks, securities dealers and casinos. Canada has no separate money transmitter or remittance licence at federal level: these activities sit under the MSB licence. Payment service providers have a separate registration with the Bank of Canada, covered further down.

Whether you obtain the licence as a Canadian MSB or as a foreign money services business (FMSB) depends on one question: do you have a place of business in Canada? Incorporation in Canada, a physical location there, or employees, agents or branches there each count. If any of them applies and you provide at least one of the eight services, you are a Canadian MSB.

If none applies, you may still need the licence as an FMSB, which is how MSB licensing in Canada works for foreign companies: a foreign MSB registration with FINTRAC. Two conditions must both be met: you direct your services at people in Canada, and you actually provide them to clients in Canada. Three things count as directing services at Canada on their own: advertising aimed at Canadian residents, running a “.ca” website, or a listing in a Canadian business directory. Pricing in Canadian dollars, customer support for Canadian users or a Canadian partner promoting your services count as extra signs. A client is “in Canada” when their address, identity document or bank, card or payment provider is Canadian, even if they are temporarily abroad.

In short, a foreign company can hold the Canadian MSB licence without a Canadian office, and a company that already serves Canadian clients needs it whether or not it has one. The gap usually comes to light when a bank or payment partner asks for the FINTRAC registration number.

Is your business an MSB without knowing it?

Three business models need the licence more often than their founders expect:

• Payment processors and PSPs. A company that receives payment instructions and sits between a payer and a merchant is “remitting funds” in FINTRAC’s eyes, as long as the merchant has access to the transfers.
• Invoice, payroll, rent and tuition platforms. Acting as an intermediary to pay someone else’s invoices is a money service. Only a business that solely collects payment for its own goods or services, or that solely supplies a payment terminal, is outside.
• Remittance and forex businesses. Money transfer in any amount, or foreign exchange above C$1,000 per client per day, makes you an MSB even if you never advertise the service.

Crypto licence in Canada: what the MSB licence gives a crypto business

Canada has no separate crypto-only licence. What is searched for as a “crypto licence in Canada” or a VASP licence is the MSB licence with “dealing in virtual currency” among the licensed services. A crypto exchange, OTC desk or wallet provider therefore obtains the same MSB licence as a currency exchange or a payment company: no capital requirement, and no difference between fiat and crypto businesses at the application stage. One MSB licence covers:

• Exchange services — fiat to crypto, crypto to fiat and crypto to crypto, whether through an exchange platform, an OTC desk, a broker model or a crypto ATM;
• Transfer services — sending virtual currency at a client’s request and receiving it for onward remittance, which is what custodial wallets that move coins for users, crypto payment processors and stablecoin on/off-ramps do;
• Fiat services alongside crypto — a company that also transmits funds or exchanges currencies adds those services to the same licence instead of applying for a second one.

For a crypto founder this means one application, one regulator and one compliance programme for the whole product, fiat and crypto included.

Serving EU clients with a Canadian crypto licence: MiCA and reverse solicitation

A question we hear often from Canadian licence holders is whether the licence opens the European market. Under MiCA, a crypto-asset service provider serving EU clients needs an EU CASP authorisation, and MiCA has no equivalence mechanism for third-country licences. A Canadian MSB therefore cannot market to, advertise to or actively onboard EU residents.

There is one lawful route: reverse solicitation. An EU client who approaches the firm entirely on their own initiative may be served, for the service they asked for and services of the same type. The firm must be able to prove that the initiative was the client’s. It is a narrow exemption with strict documentation requirements rather than a business model, but for a Canadian MSB with inbound European demand it works. Our guide to MiCA reverse solicitation sets out what is permitted, what ESMA treats as solicitation, and how to document each EU client.

MSB licence requirements in Canada at a glance

The requirements differ slightly between a Canadian MSB and a foreign MSB. Neither involves capital, a government fee or a local director.

Do you need an office in Canada?

The law does not prescribe square metres. One point in FINTRAC’s guidance settles the question for most applicants: a company incorporated in Canada is, by that fact alone, treated as having a place of business in Canada. A Canadian corporation therefore holds the licence as a domestic MSB whatever its physical footprint. The FMSB route is reserved for entities with no incorporation, location, employees, agents or branches in Canada.

Incorporation does not, however, answer FINTRAC’s follow-up questions. The application asks for detailed information about every location, and FINTRAC may send a clarification request or contact the compliance officer directly. A Canadian company run entirely from abroad through a mailbox or virtual office should expect those questions, from FINTRAC and later from its bank. A foreign company that does not want a Canadian presence has a cleaner option. It stays unincorporated in Canada and obtains the licence as an FMSB with a representative for service. A Canadian subsidiary can follow once volumes justify it.

Who is eligible

FINTRAC does not assess business plans, but it does screen people. Anyone convicted of money laundering, terrorist financing, drug trafficking, organised-crime, extortion or trafficking offences is ineligible. So is anyone convicted more than once of fraud, customs or tax-evasion offences. Equivalent convictions abroad count. A corporation is eligible when its CEO, president, directors and 20% owners are all clear of these categories and none of them is a listed terrorist or sanctioned person. The same rules apply to agents: the MSB itself verifies each agent’s eligibility and obtains their criminal record check before engaging them, and every two years after that.

Documents for the Canadian MSB licence: checklist

FINTRAC accepts complete applications only, so the file is assembled before the form is opened.

Every document submitted, including each criminal record check and translation, must be kept for at least five years. Assembling this file correctly, above all the criminal record checks and certified translations for a foreign management team, is where most of the preparation time goes, and where good advice saves the most weeks.

How to get an MSB licence in Canada: the FINTRAC procedure step by step

Obtaining the MSB licence, formally MSB registration with FINTRAC, runs through six steps.

1. Pre-registration request. You submit a short online form on FINTRAC’s website. A FINTRAC compliance officer then contacts you and issues the application form itself.
2. Application form. It asks for the business details, bank account, compliance officer, incorporation data, and the names and dates of birth of owners and senior management. An FMSB also names its representative for service.
3. Supporting documents. The criminal record checks and corporate documents from the checklist above. A director living in Estonia submits an Estonian criminal records extract, not a Canadian one.
4. Secure submission. The officer sends a link to FINTRAC’s secure document transfer system. The link expires after 15 days; miss it and the application is closed and must be started again.
5. Review. FINTRAC states that most complete applications are processed within three months; complex files take longer. During review FINTRAC may send a clarification request, which you must answer within 30 days.
6. Licence. An approval notice with the MSB registration number and a listing on FINTRAC’s public Money Services Business Registry, where anyone can look up a licensed business’s services and status; or a written denial with reasons, which you may ask FINTRAC to review.

The licence must be in place before the business provides MSB services. Operating without it is a violation that carries an administrative penalty and, in serious cases, criminal charges. FINTRAC has penalised a foreign crypto exchange for, among other things, serving Canadian clients without FMSB registration.

How long an MSB licence in Canada takes and what it costs

Counting company incorporation, the compliance documentation and FINTRAC’s review, a realistic end-to-end timeline for the Canadian MSB licence is three to four months for a well-prepared project. FINTRAC’s own review of a complete file accounts for most of that.

As for MSB licence cost in Canada, there is no government fee and no capital to deposit. The budget goes on incorporation, the criminal record checks and certified translations, the AML compliance programme, the representative for service for an FMSB, and professional fees for the project. Once licensed, the running costs are the compliance officer, the reporting systems and the effectiveness review every two years.

After the licence is granted: ongoing obligations and deadlines

The licence turns the company into a reporting entity with continuing MSB compliance obligations. Most licences that lapse do so through missed housekeeping rather than serious violations: a late renewal, an unanswered letter, a change never reported. Every licensed MSB and FMSB works with these FINTRAC deadlines.

Alongside the calendar come the substantive duties. The compliance programme has five mandatory elements: a compliance officer, written policies and procedures, a risk assessment, a training programme and the two-year effectiveness review. Client identification starts at C$1,000 per transaction for virtual currency exchanges and for funds or virtual currency transfers, and at C$3,000 for foreign exchange. On top of that come ongoing monitoring, beneficial-ownership checks and politically-exposed-person checks.

Reporting to FINTRAC covers suspicious transactions (no threshold), cash or virtual currency received of C$10,000 or more, and international electronic funds transfers of C$10,000 or more. The 24-hour rule adds up smaller transactions by the same client. The travel rule requires originator and beneficiary details to travel with funds transfers and virtual currency transfers of C$1,000 or more.

FINTRAC can deny or revoke the licence on five grounds:

• the applicant is not eligible;
• it did not answer a clarification request within 30 days;
• it did not respond in time to a demand for information;
• it did not notify FINTRAC of a change to its name or address;
• it failed to provide assistance to FINTRAC.

For an FMSB, letting the representative for service lapse is a further ground. A denied or revoked business has 30 days to apply for a review by FINTRAC’s Director, and a further 30 days from the Director’s decision to appeal to the Federal Court.

What sits beside the MSB licence: the other regimes

The MSB licence is an anti-money-laundering authorisation. Several other regimes sit beside it rather than inside it, and two of them regularly surprise founders after licensing.

Canadian MSB licence versus a US or EU licence

Founders comparing the Canadian MSB licence with other payment and crypto licences usually weigh it against two alternatives. In the United States, a FinCEN MSB registration must be combined with money transmitter licences state by state. In the European Union, an EMI, payment institution or MiCA CASP authorisation is passported across all member states. Canada is the cheapest and fastest of the three to enter; the EU is the only one whose licence travels.

Getting your MSB licence in Canada with Eesti Firma

Eesti Firma advises payment, fintech and crypto companies on obtaining the MSB licence in Canada. We help you work out whether your model needs it, whether to apply as a Canadian MSB or an FMSB, and how to prepare a file that FINTRAC accepts the first time. If you are planning a Canadian payment or crypto business, or already hold the licence and want to serve European clients lawfully, get in touch for a consultation.

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