To operate as a Money Services Business (MSB) in Canada, entities must comply with regulations set forth by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). Licensing requirements for MSBs in Canada include:
- Registration: MSBs are required to register with FINTRAC before conducting any money services business in Canada. This registration must be renewed every two years.
- Compliance Program: MSBs must establish and implement a compliance program to ensure adherence to anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. This program should include policies, procedures, and controls to detect and prevent money laundering and terrorist financing activities.
- Risk Assessment: MSBs are required to conduct a risk assessment of their business operations to identify and mitigate potential money laundering and terrorist financing risks. This assessment should be regularly reviewed and updated as necessary.
- Appointment of Compliance Officer: MSBs must appoint a compliance officer who is responsible for overseeing the implementation of the compliance program and ensuring compliance with regulatory requirements.
- Record Keeping: MSBs are obligated to maintain accurate records of their transactions and client information, including identification documents and transaction details. These records must be kept for a minimum of five years.
- Reporting Obligations: MSBs must report certain transactions to FINTRAC, including large cash transactions, electronic funds transfers, suspicious transactions, and terrorist property. These reports must be submitted in accordance with FINTRAC’s reporting requirements.
- Training and Awareness: MSBs are required to provide training to employees on AML and CTF regulations, as well as the company’s policies and procedures for compliance.
- Independent Review: MSBs must undergo an independent review of their compliance program every two years to assess its effectiveness and identify any areas for improvement.
Failure to comply with these licensing requirements can result in penalties, including fines and suspension or revocation of the MSB’s registration. Therefore, it is essential for MSBs to establish robust compliance measures and ensure ongoing adherence to regulatory requirements.
