MSB license in Canada
Support in obtaining an MSB (Money Services Business) license in Canada to run a money services business.
Cryptocurrency regulation in Canada
As of March 2021, in a public notice by the CSA and IIROC (Canadian Investment Regulatory Organization), Canada has asserted its position in regulating cryptocurrency activity. The government sector ensures that all cryptocurrency exchanges and companies comply with the regulations.
Every entrepreneur must register a company with the Financial Transaction Analysis Center of Canada (FinTRAC). The securities legislation must also apply to cryptocurrency transactions.
The use of virtual currency is not prohibited in Canada, but it is not considered legal tender. Transactions with cryptocurrency are allowed, but it is not possible to pay for state fees, taxes, and charges. The IRS has defined cryptocurrency as a commodity, which acts as a barter transaction in exchange for other goods.
This activity is governed by basic legal rules:
AML/CFT Act (PCMLTFA Act).
Virtual work companies qualify as Money Service Businesses (MSBs). The Act also applies to exchanges operating outside the country and providing services to individuals and entities in the country.
The Securities Act.
In August 2017, the Canadian Securities Administrators (CSA) passed the CSA Staff Notice 46-307 Cryptocurrency Offerings Act, which regulates the licensing of virtual currency exchanges and transactions.
In addition, virtual currencies are subject to the Canadian provincial Securities Acts:
Bank of Canada's Blockchain Project.
Regulates international payments that use DLT technology.
The type of MSB license you can get in Canada
If you want to open a cryptocurrency business in Canada, an MSB license is required for legal activities.
Companies with this type of license can perform the following financial transactions:
Currency exchange
Allows a firm to exchange crypto for crypto, crypto for FIAT, or vice versa for a commission.
Money transferring
Transfer funds and execute cross border transfers for individuals and businesses alike
Wallet service
License for companies representing cryptocurrency wallets to store cryptocurrency, create encrypted client keys, as well as to store them.
Service packages for registration of MSB license in Canada
Choose the best package of services for obtaining a MSB license in Canada
MSB LICENSE
With registering a company in Canada and corporate bank account opening
- Dedicated consultant with the fully provided individual approach
accompany with all issues related to the incorporation, Bank account opening, Financial Transactions and Reports Analysis Center (FINTRAC) registration process, answering all the questions over the phone/email/WhatsApp and other connection channels
- Full turnkey company formation assistance
remote/by physical presence (set up appointments with the notary, sworn translation of the documents, organization of other legal formalities), state duties and the notary fees are included
- Company name of your choice
verification within the Chamber of Commerce and Industry and the Canada Intellectual Property Office.
- Individual AML/KYC Policy
preparation of Individual Internal Procedural Rules and Anti-Money Laundering & Compliance Manual to comply with FINTRAC requirements in accordance with the business model of the Client. Provision of recommendations on the further business activities – up to 10 hours
- Registration of the activities within FINTRAC
submission of application and registration within Financial Transactions and Reports Analysis Center (FINTRAC), negotiation with the regulator and full support during the entire process until the registration is accomplished. State duties are included
- Corporate documents
Full set of apostilled and sworn translated corporate documents (articles and memorandum of association, registry card, etc.)
- Corporate account
assistance with opening a corporate account under crypto-oriented business B2B and C2B segregated accounts. In case of refusal by the first Financial Institution, we undertake to open a corporate account with another financial institution
- Handling the communication with Financial Transactions and Reports Analysis Center (FINTRAC)
up to 1 hour per month
- Local Anti-Money Laundering officer
with legal or financial background and skills in the compliance area (required by the law for crypto currency exchange and deposit operator) – up to 5 hours per month. Candidate search and employment arrangement is included
- Local Director
- Local Office
MSB LICENSE
With registering a company in Canada
- Dedicated consultant with the fully provided individual approach
accompany with all issues related to the incorporation, Bank account opening, Financial Transactions and Reports Analysis Center (FINTRAC) registration process, answering all the questions over the phone/email/WhatsApp and other connection channels
- Full turnkey company formation assistance
remote/by physical presence (set up appointments with the notary, sworn translation of the documents, organization of other legal formalities), state duties and the notary fees are included
- Company name of your choice
verification within the Chamber of Commerce and Industry and the Canada Intellectual Property Office.
- Individual AML/KYC Policy
preparation of Individual Internal Procedural Rules and Anti-Money Laundering & Compliance Manual to comply with FINTRAC requirements in accordance with the business model of the Client. Provision of recommendations on the further business activities – up to 10 hours
- Registration of the activities within FINTRAC
submission of application and registration within Financial Transactions and Reports Analysis Center (FINTRAC), negotiation with the regulator and full support during the entire process until the registration is accomplished. State duties are included
- Corporate documents
Full set of apostilled and sworn translated corporate documents (articles and memorandum of association, registry card, etc.)
- Corporate account
assistance with opening a corporate account under crypto-oriented business B2B and C2B segregated accounts. In case of refusal by the first Financial Institution, we undertake to open a corporate account with another financial institution
- Handling the communication with Financial Transactions and Reports Analysis Center (FINTRAC)
up to 1 hour per month
- Local Anti-Money Laundering officer
with legal or financial background and skills in the compliance area (required by the law for crypto currency exchange and deposit operator) – up to 5 hours per month. Candidate search and employment arrangement is included
- Local Director
- Local Office
FMSB LICENSE
Getting the MSB license on the already operating company in foreign country
- Dedicated consultant with the fully provided individual approach
accompany with all issues related to the incorporation, Bank account opening, Financial Transactions and Reports Analysis Center (FINTRAC) registration process, answering all the questions over the phone/email/WhatsApp and other connection channels
- Registration of the activities within FINTRAC
submission of application and registration within Financial Transactions and Reports Analysis Center (FINTRAC), negotiation with the regulator and full support during the entire process until the registration is accomplished. State duties are included
- Individual AML/KYC Policy
preparation of Individual Internal Procedural Rules and Anti-Money Laundering & Compliance Manual to comply with FINTRAC requirements in accordance with the business model of the Client. Provision of recommendations on the further business activities – up to 10 hours
It should be noted that AML Officer we are providing is a full-fledged specialist who will participate operating activities in your company for up to 5 working hours per month. Moreover, such employee shall increase sustainability of your business activity in Canada within a long-term perspective.
Process and Timeline
After 8-10 weeks company will be fully registered as a Money Services Business and 2-3 weeks will be required extra to become fully operative and open a Bank account
Stage 1
Collection of documents from the client to start the process
- 1.Preliminary project analysis
- 2.KYC collection and business description
- 3.AML/CTF policy preparation
Stage 2
Registering a business in Canada
- 1.Choose a name for the company
- 2.Rent an office and sign an agreement
- 3.Determine share capital
- 4.Prepare a set of corporate documents certified by a notary
- 5.Appoint employees with financial expertise
Stage 3
Opening a bank account
- 1.Preparation of notarized documents
- 2.Preliminary talks with the payment institution and the account opening process
- 3.Payment of share capital
Stage 4
Pre-application work and registration
- 1.Preparing and adapting documents for AML/CTF cryptocurrency company operations
- 2.Search, employment, training, and adaptation of employees
- 3.Submission of license application
- 4.Collecting additional documentation as requested by the FinTRAC representative
- 5.Negotiating with FinTRAC representative
- 6.Compliance with FinTRAC representative requirements
Stage 5
Registration process (unless a clarification request was sent to the applicant following the submission)
- 1.Submitting the documents to FINTRAC
- 2.Leading the Client and conducting negotiations with the regulator and full support during the entire process until the registration is accomplished
Securities Law
- verification of the identity of every individual or entity that pays cash or performs a transaction of $10,000 or more
- verification of a customer who transfers or exchanges the equivalent of $1,000 in cryptocurrency
- confirmation of the identity of the company within one month, after receiving information on contracts for the exchange or transfer of digital currency.
- If the cryptocurrency is received from a government organization or financial institution, an exception is introduced for additional verification of the identity of the organization that received the transaction.
Taxation
Tax laws and standards
The Income Tax Act (ITA) applies to all virtual currency transactions. Cryptocurrency is not defined as an official means of payment but has the status of assets. If a customer pays for a service or commodity with cryptocurrency - this has the status of a profitable (barter) transaction. Such "goods" should be included in the seller's income for tax purposes. Entrepreneurs need to convert the value of the cryptocurrency to CAD to confirm the transaction to the IRS.
Tax Rate
Cryptocurrency activities may fall under the regulation of the Income Tax Act (ITA). The rate depends on the annual income: from 15% to 33%. In addition, it is necessary to consider the provincial tax rate, where the cryptocurrency company will operate.
Reporting
When profits from cryptocurrency activities are taxed as a profitable business - 100% of earnings are taxed. Only 50% of a company's profits are taxable if capital gains are reported for tax purposes. The Canadian government recommends that entrepreneurs make a regular report. It should include the date of cryptocurrency transactions and the price in Canadian dollars at the time of the transaction.Persons involved in cryptocurrency transactions are required to report any gains or losses from the purchase, exchange, or sale of digital currencies in their declarations.
Tax laws and standards
The Income Tax Act (ITA) applies to all virtual currency transactions. Cryptocurrency is not defined as an official means of payment but has the status of assets. If a customer pays for a service or commodity with cryptocurrency - this has the status of a profitable (barter) transaction. Such "goods" should be included in the seller's income for tax purposes. Entrepreneurs need to convert the value of the cryptocurrency to CAD to confirm the transaction to the IRS.
Tax Rate
Cryptocurrency activities may fall under the regulation of the Income Tax Act (ITA). The rate depends on the annual income: from 15% to 33%. In addition, it is necessary to consider the provincial tax rate, where the cryptocurrency company will operate.
Reporting
When profits from cryptocurrency activities are taxed as a profitable business - 100% of earnings are taxed. Only 50% of a company's profits are taxable if capital gains are reported for tax purposes. The Canadian government recommends that entrepreneurs make a regular report. It should include the date of cryptocurrency transactions and the price in Canadian dollars at the time of the transaction.Persons involved in cryptocurrency transactions are required to report any gains or losses from the purchase, exchange, or sale of digital currencies in their declarations.
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