Money services businesses (MSBs) are Canadian companies that provide certain financial services and are registered with the regulatory authority called FINTRAC. In terms of the range of permitted activities, MSBs are similar to European and British Electronic Money Institutions (EMIs), but can also be engaged in cryptocurrency operations.
What can MSBs do:
Canadian money services business can perform the following activities:
- Open payment accounts
- Make local and international payments and money transfers
- Exchange currencies
- Issue cards
- Acquire cards
- Exchange, send and receive crypto
- Perform crowdfunding activities
Benefits
Shortest time-to-market
Smallest launch cost across all jurisdictions
Opportunities to operate internationally
Non-strict local presence requirements
3-4 months to get registered as a money services business
No need to hire a local director or build an extensive local team
No restrictions by local authorities on working with global clients
Simple registration process reduces extensive legal costs at the initial stage
Regulatory body
Money Services Businesses are supervised by a government agency called FINTRAC. FINTRAC is an acronym for the Financial Transactions and Reports Analysis Centre of Canada. It is the financial intelligence unit that monitors monetary transactions to identify and prevent illegal activities such as money laundering and financing of terrorist organizations. The centre reports to the Minister of Finance, who in turn is accountable to the Parliament. From 1-November-2024 some MSB companies also fall under the supervision of the Bank of Canada.
Case studies
Very diverse businesses use MSBs, including neo-banks and e-wallets, crypto-fiat wallets, remittance and money transfer operators, card issuers and acquirers. Here are some cases where MSBs are particularly well-suited:
- Startups and companies operating with limited time and budget.
- Subsidiaries of payment organizations from other jurisdictions looking to move some of their flows outside the scope of their primary license.
- International remittance services who build a bridge between the Western world and emerging markets.
- Crypto companies.
MSB vs FMSB
There are two options for registering a money services business:
- Foreign MSB (FMSB) is an overseas company that wants to provide services to Canadian clients.
- Regular MSB is a Canadian company that can offer services regardless of the client's location.
For most of our clients, we recommend registering as a regular MSB: it is considered a more credible form of registration and provides more flexibility in opening correspondent accounts with banks in Canada and worldwide.
