The PCMLTFA defines Money services businesses (MSBs) as persons or entities that provide one or more of the following services: foreign exchange dealing, remitting or transmitting funds, issuing or redeeming money orders or similar negotiable instruments, dealing in virtual currencies, or crowdfunding platform services.
To legally operate in Canada, and combat illicit financial activities, MSBs must register with FINTRAC in accordance with the PCMLTFA, and subsequently renew their registration every two years.
MSBs must register as Canadian MSBs and Foreign MSBs and comply with the relevant regulatory requirements applicable to their entity and activities type.
To be considered a Canadian MSBs, 2 criteria must be met :
The concerned entity must offer at least one money services business service as provided by the PCMLTFA (e.g. foreign exchange dealing, remitting or transmitting funds, dealing and virtual currency etc.).
The entity must have a place of business in Canada. The concerned entity must either be incorporated in Canada; have a physical location in Canada; or, have employees, agents or branches in Canada.
Other type entities may fall under the definition of a MSB, including entities that hold a permit or licence related to any of the aforementioned services or entities that advertise (by any means, including newspaper, internet, any other media…) that they engage in any of the above-mentioned services. Thus careful consideration must be given to the definition provided by the PCMLTFA to confirm whether an entity is in scope or not.
To be considered a Foreign MSBs, all the following criteria must be met:
The concerned entity may engage in the business of providing at least one more MSB service
The concerned entity does not have a place of business in Canada
The concerned entity directs its MSB services at persons or entities in Canada
The concerned entity must provide these services to clients in Canada
Both MSBs and Foreign MSBs are subject to regulatory requirements relating to registration; implementation of a compliance program; know your customer; reporting, record keeping; and the travel rule.
Depending on the jurisdiction, variation may exist in the definition of; the regulatory requirements applicable to MSBs or Foreign MSBs.