RPAA Registration in Canada: Application Support

Regulatory authority - Bank of Canada

The RPAA regulations have given additional powers to the Bank of Canada (BOC), the primary supervisor of the financial system.

The Bank of Canada supervises PSPs under the Retail Payment Activities Act (RPAA), covering operational risk management, incident response and the safeguarding of end-user funds; FINTRAC supervises their AML/ATF compliance under the PCMLTFA.

The Bank of Canada takes enforcement action against violators, in the form of monetary sanctions or other restrictions. This includes PSPs who have not complied with the rules for transferring or storing money.

What types of MSBs need to register under RPAA?

Based on the Retail Payment Activities Act, an individual or legal entity must be registered with the RPAA before providing payment services if it plans to:

• Manage, and move fiat currency on behalf of a customer (including online payments, and mobile payments).
• Provide fund-safeguarding features like digital wallets, etc.
• Perform electronic funds transfers (EFT) as requested by the client.
• Be involved in payment clearing, and cross-border cash payments.

The new rules apply to service providers if they:

• Have formalized a business in Canada.
• Intend to commence business operations in this jurisdiction.
• If the business is not conducted in the jurisdiction but provides “direct” services to users (businesses and individuals) who are located in Canada.

Exempt registration entities include: banks, insurance companies, the Bank of Canada, the Canadian Payments Association, the SWIFT network, and Visa. They are subject to a different regulatory framework.

It is projected that approximately 3,000 organizations involved in the electronic payment chain will have to apply to the Bank of Canada to comply with the RPAA.

Schedule and process of registration in retail payment activities act (RPAA)

1. The implementation of the retail payment activities regulations is taking place in several phases:
2. The transition period is from November 1, 2024, to September 7, 2025.
3. November 1, 2024 - November 15, 2024. Companies have only two weeks to complete the application through the online portal and pay the registration fee. If a company has completed the registration within this timeframe, it continues onward without interruption.
4. November 16, 2024 - September 7, 2025 PSPs also complete the form to the BOC, but already wait 60 days before becoming fully operational.
5. Since September 8, 2025, registered PSPs must comply with the risk-management, safeguarding and annual reporting requirements. A new PSP must be registered with the Bank of Canada before it performs any retail payment activities; registration cannot be granted during the Minister of Finance’s 60-day national security screening period unless the Minister decides earlier not to review the application.

The main problems with RPAA registration

While implementing all the retail payment activities act regulations several difficulties may arise:

• Getting in time to complete the application form on the BOC's online portal by September 8, 2025. After September 7, the federal registration process will take quite some time.
• Determine exactly whether the activity falls under the rules of the current regulation. Companies that are solely engaged in cryptocurrency transfers, buying/selling, are not subject to the Act. But if the crypto operator offers prepaid cards and transactions with fiat currency, it already undergoes a full registration procedure.
• Correct completion of the application form. Non-compliance of information with the RPAA criteria increases the chances of the application being rejected and extending the waiting period from the Regulator.
• Making adjustments to the type of activity of PSP operators. The Bank of Canada has the right to impose monetary penalties, limit the activity (transaction volume), and revoke the registration.

How to successfully complete the RPAA registration process

Several recommendations can be followed to complete the BOC registry process, with accurate compliance with all the parameters of the retail payments activities act:

• When collecting a complete set of documents, the business organization should determine whether the business model falls under the RPAA criteria, whether it has a risk management structure, whether the type of payment transactions complies with the standards of the act, and whether the company has developed internal policies.
• Engage consultants to check for compliance with the RPAA or improve existing procedures within the company.
• There is a 60-day review period until September 8, and applications may be rejected due to inaccuracies, so the company should be prepared for such challenges and have a plan of action in case problems arise.
• Take advantage of outside help, namely lawyers who are practicing in this market and know the specifics of the Canadian financial system.

Conclusion

Any business structure that falls under the standards of the RPAA must undergo a registration procedure and, as a result, be listed in the retail register msp. Only then will the activity be considered legal. Violators may suffer and face fines and restrictions of operations by regulatory authorities. PSP operators better hurry up with the decision to apply, as the transition period ends very soon.

The new PSP regulations were developed and implemented to ensure the stability and security of the financial services market, to strengthen the confidence of market participants, and to comply with international standards in the fight against fraud.