MSB License in Canada

According to the PCMLTFA and FINTRAC requirements, MSB (Money Services Business) status is assigned to companies that provide a specific list of financial services in Canada or to Canadian residents. In 2025, the list of these services was expanded to include virtual assets and the digital transformation of the sector.

Main activities covered by MSB:

• Currency transactions. Exchange of one fiat currency for another, including exchange services and multi-currency payment platforms.

• Money transfers. Transferring funds between individuals and legal entities within Canada or abroad, including using bank cards, e-wallets, and mobile apps.

• Paying bills on behalf of a client. Acting as an intermediary in the transfer of funds from a payer to a payee: paying utility bills, loans, taxes, salaries, and other obligations. An exception is acting on behalf of a creditor to manage debt.

• Issuance and redemption of payment instruments. Handling money transfers, traveler’s checks, prepaid cards, and other negotiable instruments.

• Virtual asset transactions. Fiat ↔ crypto exchange; Crypto ↔ crypto; Provision of technical solutions (e.g., for crowdfunding in tokens or stablecoins).

Indicators of MSB status:

• Physical presence in Canada: office, branch, agent, representative.
• Registration or license in other jurisdictions related to similar services.
• Active promotion of financial services in the Canadian market through advertising, websites, or partner channels.
• Provision of services regardless of advertising, if the amount of transactions with a single customer exceeds CAD 1,000 for a single transaction or a series of related transactions.
• Receipt of income from the above services, even without a license in Canada.
• The business is registered in Canada or has passed RPAA registration in cooperation with payment providers.

In addition, all companies that fall under these criteria are required to obtain a Fintrac license and comply with AML/CTF regulations. This allows them to operate legally and gain full access to the banking infrastructure.

FMSB (Foreign Money Services Business) status applies to foreign companies that provide financial services to Canadian customers without a physical presence in the country. Regulation is carried out under the PCMLTFA law and FINTRAC requirements. Registration as an FMSB Canada is mandatory for anyone conducting such activities regarding residents.

FMSB recognition criteria:

• The company in Canada provides services that meet the definition of a money services business, including currency exchange, money transfers, digital asset transactions, and the issuance or redemption of payment instruments.
• There is no registered legal entity, office, representative, or agent in Canada.
• Services are provided to customers connected to Canada by place of residence, type of documents, sources of payment, or temporary stay in the country.
• Marketing channels targeting a Canadian audience are used: advertising in local media, ownership of a .ca domain, and registration in business directories.

For companies working with digital assets, FMSB status is a mandatory element of legal compliance, along with obtaining a crypto license in Canada if the activity includes virtual currency exchange.

• Agents of registered MSBs

A company or individual acting solely on behalf of a registered provider is not recognized as an independent entity. In such cases, the primary participant listed in the Canada MSB register is responsible.

• Operations as part of another licensed business

If money services are provided as part of the activities of another regulated institution (e.g., a bank or payment institution), the procedure for obtaining an MSB license in Canada is not required. Such activities are regulated under the main license.

To operate legally as a money service business in Canada, you must meet the following conditions:

Business registration.

The company must be registered in Canada in the appropriate territorial and federal registry and obtain a business number (BN) from the Canada Revenue Agency (CRA). This is the first step towards Canadian MSB registration.

Registration with FINTRAC.

You must register with FINTRAC. This is a mandatory requirement for inclusion in the Canada MSB registry. You must provide FINTRAC with complete information about your company’s activities, ownership structure, and the nature of the services you provide.

Opening a physical office.

To obtain an MSB license, you must have a physical presence in Canada – an office, employees, or agents.

Compliance program.

Implementation of a comprehensive AML/CTF program, including:

• Anti-money laundering (AML) and counter-terrorist financing (CTF) policies;
• Risk assessment and management system;
• Appointment of a compliance officer;
• Internal audits and training;
• Regular reassessment of programs and procedures.

Customer identification (KYC) and transaction records.

Know Your Customer (KYC) procedures must be implemented, including identity verification for transactions exceeding CAD 1,000. All transactions must be documented by FINTRAC regulations for a minimum of 5 years.

Reporting obligations.

Regular reporting on:

• Suspicious transactions;
• Large cash transactions (over CAD 10,000);
• International transfers.

Transparency of owners and employees.

All founders, shareholders, and key persons must have a clean criminal record. Criminal background checks must be provided from countries of citizenship and residence.

Presence of a qualified director.

At least one director must have experience in the financial or economic sector. This is especially important when applying for a crypto license if the activity is related to virtual assets in Canada.

Companies registered in Canada as a Money Services Business (MSB) are required to pay corporate income tax, which consists of two components: federal and provincial.

Tax rates.

The basic federal corporate tax rate is 38%. However, after tax deductions, the effective rate is reduced to 15%. In addition, companies pay tax in the province where they are registered. Provincial rates vary, and full information is available on the CRA page on taxes by region. For example:

• Ontario – 11.5%
• Quebec – 11.5%
• British Columbia – 12%
• Alberta – 8%
• Prince Edward Island – 16%

Thus, the total tax burden on an MSB company can range from 23% to 31%.

Taxes on cryptocurrencies.

Even if a company does not deal with cryptocurrencies directly, any transactions involving digital assets are subject to taxation. The CRA considers them either as capital gains or as business income, depending on the nature of the transaction. This is reflected in the general rules for business taxation.
As of June 2024, new changes have come into effect. Now, 2/3 of capital gains are taxable instead of the previous 50%.

Goods and Services Tax (GST/HST).

MSB companies are required to collect and pay goods and services tax (GST) or harmonized sales tax (HST):

• GST rate – 5%;
• HST applies in some provinces, with a total rate of up to 15%.

Companies are required to collect tax when providing taxable services (e.g., transfer or processing fees).

Reporting on foreign assets.

If an MSB company owns cryptocurrency assets or accounts outside Canada and their total value exceeds CAD 100,000, it is required to file Form T1135. Questions about completing this form are detailed in the official CRA section.