MSB In Canada: Scope Of The Authorization And Requirements
The Canadian financial services market is growing rapidly. This has a great effect on the economy of the state, and a lot of foreign businessmen want to open their companies there. In Canada, such instruments of consumer protection and finances are laid down, making them attractive to foreign investors. In this regard, the investors are looking at the possibility of getting an MSB license in Canada.
Our company is ready to provide you with professional assistance in obtaining this permit not only in Canada but in hundreds of other jurisdictions worldwide. We have been working in this field for many years and are real experts, sincerely committed to our work.
Definition And Types Of MSBs
MSB refers is not being part of the banking system. But it’s authorized to offer certain financial services. The Center for Analysis of Financial Transactions and Reports has been appointed as the regulatory authority for the financial sector in the country. To operate legally in Canada, You need an MSB license. At the same time, some firms can operate only in accordance with the anti-money laundering law.
In Canada, businesses that have an MSB license are authorized to conduct the following financial transactions:
● Currency Exchange;
● Money Transfers both for the individual and the company.
● Purchase And Sale Of Cryptocurrencies;
● Services Related To Electronic Wallets;
● Payments Using Terminals;
● Exchange Of Digital Currency.
If the firm is registered in another jurisdiction and is engaged in the provision of financial services range, then it is necessary to get the FMSB license. These two types of licenses do not differ much, but the FMSB makes it possible for a company with a ready-made working business to operate in Canada.
MSB Licensed Companies and its Responsibilities
This section contains the key area of accountability of the MSB licenses. Let us understand it here.
- Data about users of the company’s services. If the transaction is carried out for an amount of more than ten thousand USD, customers must go through the verification procedure.
- If the entity is approached by people who hold any position of power (political attachment) in the state, the company is obliged to request data on the source of this client’s money.
- It is also important to properly maintain and store all financial documents. All data on money transactions with additional customer verification must be kept for at least five years after such a transaction.
To license an MSB in Canada, you are required to mindfully learn the specific points of this jurisdiction’s financial market and all the state’s rights and laws.
Regulatory Framework For MSB In Canada
To operate in the financial services industry, a firm must be registered with FINTRAC. FMSB and MSB companies need to comply with all criteria of the country’s money laundering legislation and counter the financing of terrorism.
FINTRAC is one of the Canadian Financial Intelligence Units. FIU helps detect, deter, and prevent money launder and terrorist financing. Canada’s regulators are created under PCMLTFA.
Regulatory Objectives: AML, CFT, Consumer Protection
All companies applying for an MSB license in this jurisdiction must hire an employee to comply with all norms and requirements. This is the person responsible for reviewing and implementing the program, drawing up plans and implementing compliance policies, reviewing mitigation measures and strategies, and preparing a development program to ensure that all employees and agents who are related to the company are properly trained.
It is also desirable to appoint a compliance officer. This should be a person who is not involved in receiving, transferring, and paying money. This will make it possible to set up a good system of checks. A specialist in this field must have experience and knowledge of the organization and operation of your entity, take into account all the risks, and effectively create a monitoring program.
You also need to prepare KYC documentation and transaction reporting. How detailed every report should be depends on the size and structure of the company. Each compliance procedure and policy must be continuously updated to be up to date. All plans must also be approved by a senior officer.
Obtaining An MSB License In Canada: Verifying The Identity Of The Client
According to the law and existing regulations, all firms that provide financial service lists are required to verify the identity of their own customers. Often, it is necessary to check the names of company directors, names and addresses. This procedure must be carried out if you perform the following operations:
● Issue Or Redemption Of Funds In The Amount Of 3 Thousand Dollars;
● Transfers Of Funds From 1000 Dollars;
● Currency Exchange From 3 Thousand Us Dollars;
● Large Cash Transactions;
● Suspicious Transactions;
● Records Of Customer Data.
The Anti-Money Laundering and Counter-Terrorist Financing (“AML/CTF”) laws of Canada, the PCMLTFA Act and its supplementary regulation basis apply to different types of companies, including MSB.
What Can Be Done To Comply With AML/CTF Requirements?
The entire planet is actively fighting money laundering, so regulators of jurisdictions must be sure that your company is legitimate and conducts transparent and honest activities. In Canada, as in other countries, there are AML/CTF (Anti-money launder/combating the financing of terrorism) rules that all businesses must comply with.
For example, in this jurisdiction, the following items are included in the compliance program.
The company must have a compliance specialist. This is the person responsible for maintaining and improving the AML/CTF rules. An employee can work from any corner of the planet; it is not necessary to be in the jurisdiction. This employee is also responsible for compliance with laws and regulatory requirements.
Assessments Of Risks
It is necessary to use, assess risks, and document how the company counters money laundering and terrorist financing.
Implementing The Written Compliance
It is also important to develop and implement written compliance policies and procedures in accordance with the law, which must be approved by senior staff. It is also important to prescribe the duties of employees in accordance with the norms.
Training For Employees
The firm must establish and provide written training for employees, agents, and others who may act on behalf of the firm. This means that you need to create a program for training testing so that you can understand whether employees understand their responsibilities role in the company.
It is important to review training every six months for compliance with AML/CTF policies to confirm the effectiveness of the program. And you need to monitor the rules, risk assessments, and skills of employees to assess the program’s quality and compliance with the law.
What Is KYC And How To Comply With Its Rules?
KYC can be decoded as “know your client”. This term means that any company or agent must make sure that the client’s business is legal and clean. Often, such information is confirmed with the help of various tests and questionnaires.
When licensing an MSB company, you need to go through the KYC procedure, which includes:
● Collection And Processing Of Data About The Company And Owners;
● Tracking Suspicious Transactions;
● Compliance With All Licensing Requirements;
● Maintaining Company Records.
Scope Of Permissions For MSB
With this license, you can work in the following areas:
● Currency Exchange;
● Funds Transfers;
● Operations with Traveler’s Checks, Transfers, And Operations;
● Cashing Checks
● Maintenance Of Atms;
● Renting A Place For Self-Service Devices;
● Cryptocurrency Transactions.
When opening a company that is related to financial services, you need to obtain an appropriate license in Canada. From 2020, it is possible to legally trade cryptographic currencies in this jurisdiction because they have allowed the operation of digital currency exchanges and related payment resources.
Since then, firms that deal in cryptographic currencies have been considered companies associated with financial services, which means the requirement to comply with all the rules and laws that are presented for organizations of this type.
If you want to open your own financial company in Canada, you need to license the business. With an MSB license, an enterprise has the right to operate anywhere in the world. An overseas company with an FMSB permit can only operate in Canada. Our specialists will give professional advice and help you choose the right license and register a company.
The following article’s author is Denys Chernyshov. He is the CEO and founder of the world-famous law firm Eternity Law International.