The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is the national financial intelligence agency responsible for supervising MSBs. Registering with FINTRAC is a legal requirement and an essential step to operate lawfully within Canada’s financial ecosystem.
This article explains what an MSB is, who needs to register, the registration process, costs, compliance obligations, and how crypto businesses fit into Canada’s MSB framework.
What is an MSB?
An MSB (Money Services Business) is any individual or company that provides financial services outside of traditional banking. According to Canadian law, the following activities classify as MSB services:
Foreign Exchange Dealing – Exchanging currencies.
Money Transferring – Sending money domestically or internationally.
Issuing or Redeeming Money Orders, Traveler’s Cheques, or Similar Instruments.
Dealing in Virtual Currencies – Offering crypto exchange, wallets, or related services.
Remittance Services – Facilitating payments for customers.
Payment Processing – Handling payments between businesses or consumers.
If your business performs any of these activities, you must register as an MSB with FINTRAC.
Why MSB Registration Matters
Legal Compliance – Operating without registration is a criminal offense and can result in fines, penalties, or imprisonment.
Customer Trust – Registration increases credibility and reassures clients.
Banking Access – Banks in Canada typically require proof of MSB registration to provide accounts and services.
Investor Confidence – Institutional investors prefer working with regulated businesses.
Market Opportunities – A registered MSB can legally offer financial and crypto services to Canadian customers.
Types of MSBs in Canada
Canada recognizes two categories:
Domestic MSB
A business that operates within Canada.
Foreign MSB
A business located outside Canada but offering money services to Canadian customers.
For example, a U.S.-based crypto exchange serving Canadian clients must register as a Foreign MSB with FINTRAC.
FINTRAC and Its Role
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is the federal agency responsible for:
Registering MSBs.
Monitoring compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).
Analyzing financial transactions to detect money laundering and terrorist financing.
Sharing intelligence with law enforcement agencies.
Who Needs to Register as an MSB in Canada?
You must register if your business:
Exchanges foreign currencies.
Transfers money or funds.
Issues or redeems money orders, traveler’s cheques, or similar products.
Deals in virtual currencies (cryptocurrencies, stablecoins, tokens, etc.).
Offers payment or remittance services.
? Even if your company is located outside Canada, you must register if you target Canadian clients.
MSB Registration Requirements
To register as an MSB, you need to provide FINTRAC with:
Business Information
Legal name, trade name, and incorporation details.
Business address, phone number, and email.
Description of services offered.
Ownership and Management
List of directors, senior management, and beneficial owners.
Background checks to ensure no involvement in money laundering or fraud.
Compliance Officer
Appointment of a designated compliance officer responsible for AML/CTF compliance.
Compliance Program
Written AML and KYC policies.
Risk assessment framework.
Training program for employees.
Independent audit plan.
Record-Keeping and Reporting
Maintain detailed client records.
Report suspicious and large transactions to FINTRAC.
MSB Registration Process in Canada
Determine Eligibility – Confirm that your services fall under MSB activities.
Prepare Documentation – Collect business details, compliance manuals, and director information.
Submit Application – Register online through the FINTRAC MSB Registration System.
Review by FINTRAC – FINTRAC may request clarifications or additional documents.
Approval & Listing – Once approved, your business is listed in the Public MSB Registry, accessible to banks, clients, and regulators.
MSB Registration Costs
Application Fee: FREE (FINTRAC does not charge registration fees).
Compliance Costs: Businesses usually spend between CAD 10,000 – 50,000 annually on compliance programs, audits, and staff training.
Consultancy Costs: If you hire legal or compliance experts, setup fees may range from CAD 15,000 – 40,000 depending on complexity.
So, while the registration itself is free, ongoing compliance costs are significant.
Compliance Obligations After Registration
Once registered, an MSB must:
Implement KYC (Know Your Customer)
Verify customer identity before offering services.
Apply enhanced due diligence for high-risk clients.
AML/CTF Program
Monitor transactions for suspicious activity.
Report suspicious transactions to FINTRAC.
Submit Large Cash Transaction Reports (LCTRs) and Large Virtual Currency Transaction Reports (LVCTRs) for amounts ≥ CAD 10,000.
Record Keeping
Keep detailed records of clients, transactions, and compliance activities for at least 5 years.
Compliance Officer & Training
Maintain a trained compliance team.
Conduct annual training sessions for staff.
Independent Audit
Regular compliance audits to evaluate program effectiveness.
MSB Registration and Cryptocurrency
Since June 1, 2020, Canada requires all businesses dealing in virtual currencies to register as MSBs. This includes:
Crypto exchanges.
Crypto ATMs.
ICO and token issuers.
Wallet service providers.
Crypto MSBs must:
Verify users’ identities.
Monitor blockchain transactions for suspicious activity.
Report large crypto transactions (≥ CAD 10,000).
Canada was one of the first major countries to regulate cryptocurrency businesses under its MSB framework, making it a crypto-friendly but highly regulated market.
Penalties for Non-Compliance
Failure to register as an MSB or comply with obligations can lead to:
Administrative Monetary Penalties (AMPs) – Ranging from thousands to millions of Canadian dollars.
Criminal Charges – Fines up to CAD 2 million and imprisonment for up to 5 years.
Loss of Banking Relationships – Banks will refuse accounts to unregistered MSBs.
Reputational Damage – Public listing of violations by FINTRAC.
Benefits of MSB Registration in Canada
Legal Market Access – Ability to serve Canadian clients.
Enhanced Reputation – Recognition as a compliant financial business.
Banking & Partnerships – Easier to access payment networks and banking services.
Investor Confidence – Attracts funding by demonstrating regulatory compliance.
Global Expansion – Recognition in Canada can improve credibility abroad.
Conclusion
MSB registration in Canada is essential for businesses offering money services, including cryptocurrency operations. While the registration itself is free, compliance obligations are ongoing and require significant investment in AML, KYC, and reporting systems.
For businesses aiming to operate in Canada’s growing financial and crypto sector, FINTRAC MSB registration is both a legal necessity and a strategic advantage.
By registering as an MSB, companies gain trust, regulatory security, and access to one of the most respected financial markets in the world.
