Payment and crypto businesses can serve Canadian customers from abroad. If your business meets the foreign money services business (FMSB) criteria, it must register with FINTRAC, Canada’s financial intelligence unit. This guide explains the FMSB requirements, registration process and permitted services, and when setting up a Canadian company may be the more suitable route.
What is a foreign MSB in Canada?
A foreign money services business is a company based outside Canada that offers money services to customers in Canada. Canada brought these businesses under its anti-money laundering rules in June 2020, bringing firms that serve Canadians remotely within the Canadian AML framework.
Your company is an FMSB when all four conditions apply:
- It offers at least one money service covered by Canadian law.
- It has no place of business in Canada.
- It directs its services at the Canadian market.
- It provides those services to clients in Canada.
Targeting Canada can include advertising to Canadians, operating a .ca website or appearing in a Canadian business directory. Each can be enough to establish that services are directed at Canada. Where none applies, FINTRAC can consider other indicators, such as Canadian-dollar pricing, support for Canadian users or presenting services as available in Canada.
A customer counts as being in Canada if, for example, they have a Canadian address, hold Canadian-issued identification, or pay through a Canadian bank, card issuer or payment processor. Canadians who are temporarily abroad still count.
If you already accept Canadian sign-ups, review your registration status before onboarding more customers.
What services can an FMSB offer?
An FMSB can provide the same range of activities as a Canadian money services business. The application asks you to select your planned services and estimate the annual transaction volume for each.
For most fintechs, the main services are remitting and transferring funds, money orders, and buying, selling or transferring virtual currency. The regime also extends to issuing or cashing traveller’s cheques and similar instruments, operating crowdfunding platforms, cashing cheques, transporting cash in armoured vehicles and providing acquiring services for privately owned cash machines.
Traditional payment services and crypto services can sit under a single registration, an approach that is unusual internationally.
FINTRAC registration is not a licence and does not give general permission for every payment activity. Businesses handling retail payments may also need to register with the Bank of Canada under the Retail Payment Activities Act (RPAA), which can apply to foreign firms targeting Canadian users. Holding client money, offering e-wallets or processing payments in ordinary currencies are typical triggers. Provincial rules can also apply: Quebec has its own money services licensing system, while custody of customers’ crypto assets may raise securities-law questions.
How does foreign MSB registration work?
Applications are submitted to FINTRAC, with no government registration fee. Registration must be in place before you begin serving Canadian customers. FINTRAC closes incomplete applications, so preparing a complete submission is important.
Check your status
Compare your services and customer base with the four FMSB criteria to confirm whether registration is required and which services to include.
Set up your compliance framework
Appoint a Compliance Officer, prepare AML policies and procedures, document a risk assessment and plan staff training. FINTRAC asks for the Compliance Officer’s details in the application.
Appoint a Canadian representative for service
Every FMSB needs someone who resides in Canada and can receive FINTRAC notices and inquiries on its behalf. The representative acts as a point of contact; legal responsibility for compliance remains with your company.
Gather your documents
Prepare evidence of the company’s existence and management, its ownership and control structure, details of owners and senior managers, bank account information, employee numbers and projected annual volumes for each service.
Certificates of clearance are required for the CEO, directors and anyone who directly or indirectly owns or controls 20% or more of the company. Each certificate must come from the person’s country of residence and be less than six months old when filed.
Documents in languages other than English or French require a certified translation.
File in two stages
Submit the pre-registration form. A FINTRAC officer then provides the full application form and a secure upload link, which remains open for 15 days. Foreign applicants are encouraged to combine their documents into one PDF.
Answer follow-up questions
You have 30 days to respond to FINTRAC’s clarification requests. An unanswered request can lead to refusal.
Receive your registration number
FINTRAC states that most complete applications are processed within around three months, although complex cases can take longer. Once registered, your business receives a registration number and appears in the public registry. Bank account opening is a separate process that follows afterwards.
How Complium can help
We manage FINTRAC registrations for foreign money services businesses and Canadian MSBs, from assessing your services and preparing the documents and compliance programme to responding to FINTRAC’s questions. Where the business model involves payments, we also assess whether Bank of Canada registration is required.
FMSB or Canadian MSB — which route makes sense?
Both routes involve broadly the same anti-money laundering obligations. The decision centres on your business structure, ongoing costs and how Canadian banks and partners view the business.
Why companies choose FMSB status
The main advantage is simplicity. You serve Canada through your existing company, with no new entity to form, no Canadian corporate filings, no local registered office and no separate Canadian accounts or tax returns. Groups operating internationally can retain one structure and continue working with existing banks and payment partners.
The drawbacks of FMSB status
Banking is often the main challenge. Canadian banks and payment providers must confirm that a foreign MSB they serve is registered, and many prefer a Canadian entity, local presence or resident director. Customers and partners may also view a foreign company as less established locally.
If your Canadian representative’s name or address changes, FINTRAC must be informed within 30 days or registration can be cancelled.
The FMSB route also does not save time, as the application process is the same as for a Canadian company.
Why companies set up a Canadian MSB
A Canadian corporation can be a more familiar counterparty for local banks and payment partners and provides a visible market presence. Some businesses acquire a ready-made Canadian company with an existing FINTRAC registration, then notify FINTRAC of changes to ownership and management. Availability varies.
The trade-offs of a Canadian MSB
You take on a second company, with its own corporate, accounting and tax obligations, as well as the cost of incorporating or acquiring it.
Ongoing compliance obligations for FMSBs
Registration is the starting point. An FMSB has the same anti-money laundering duties as a Canadian business, and FINTRAC can examine how effectively it meets them.
Keep your registration current
Registration lasts two years and must be renewed on time. Changes to the information filed, including your representative’s details, must be reported within 30 days. The same deadline applies if you stop offering money services. Operating without valid registration can result in financial penalties or criminal charges.
Maintain an effective compliance programme
Your Compliance Officer, written procedures, risk assessment and training must work in practice. The programme must be reviewed for effectiveness at least every two years.
Know your customers
Verify identities, establish who ultimately owns business clients, screen for politically exposed persons, determine whether clients act for someone else and monitor relationships over time.
Report to FINTRAC
Suspicious activity must be reported regardless of amount, including attempted transactions and suspected sanctions evasion. Reporting also covers property belonging to sanctioned persons, receipts of CAD 10,000 or more in cash or virtual currency, and certain electronic transfers. Smaller transactions within a 24-hour period may need to be aggregated.
Apply the Travel Rule
Sender and recipient details must accompany money transfers and virtual currency transfers under the Travel Rule.
Keep complete records
Many recordkeeping requirements begin at CAD 1,000, including international and crypto transfers. Every crypto exchange requires its own record, regardless of value. Records generally must be retained for at least five years and provided to FINTRAC within 30 days of a request. Electronic storage is acceptable, provided records can be retrieved promptly.
Follow ministerial directives
These apply to every business covered by the rules and can restrict dealings involving certain high-risk countries.
Check eligibility early
Certain individuals are ineligible to register a money services business. Check owners’ and managers’ police certificates early and keep them up to date.
Assess Bank of Canada requirements alongside FINTRAC
If you handle payments in ordinary currencies for Canadian users, assess the RPAA at the same time. Both registrations may be required before launch.
For more detail on reporting and recordkeeping, read our Canadian MSB AML reporting requirements guide.
How Complium can support your next steps
If you serve Canadian customers from abroad, first establish whether your business is an FMSB. Then assess whether that route or a Canadian company better supports your banking needs and growth plans. Complium supports both options, including FINTRAC registration, ready-made Canadian MSB companies, Bank of Canada registration, compliance programmes and ongoing support and renewals. Share your services, target customers and expected volumes with us to discuss the appropriate route and next steps.
Frequently asked questions
Do I need a Canadian office to register as an FMSB?
The FMSB route applies to businesses without a place of business in Canada. You must still appoint a representative for service who resides in Canada.
Is FINTRAC registration a licence?
No. FINTRAC registration is not a licence and does not give general permission for every payment activity. Other regulatory requirements may apply.
How long does FMSB registration take?
FINTRAC states that most complete applications are processed within around three months. Complex cases can take longer.
Does FINTRAC charge an FMSB registration fee?
FINTRAC does not charge a government registration fee.
How often must an FMSB renew its registration?
Registration lasts two years. The business is responsible for renewing on time.
Discuss your Canadian market plans with Complium’s legal and compliance team.
