Money Services Business (MSB) in Canada and the United States
The US MSB is a financial license for all financial industries. In other words, as long as you are engaged in financial services-related industries, you can apply for a US MSB.
The Canadian MSB license is a foreign exchange license, and has a more detailed division of regulatory scope.
Regulations and Regulatory Bodies:
Canada: MSBs in Canada are regulated under the Money Laundering and Terrorist Financing Act (AML/ATF Act) and supervised and managed by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
United States: MSBs in the United States are regulated by the Bank Secrecy Act (BSA) and supervised and managed by the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department.
Registration and Compliance Requirements:
Canada: MSBs in Canada must register with FINTRAC and adhere to compliance requirements under AML/ATF laws, including reporting large cash transactions and suspicious transactions.
United States: MSBs in the United States must register with FinCEN and comply with the compliance requirements of the BSA Act, including reporting large cash transactions, suspicious activity reports, and conducting customer due diligence.
Review and reporting requirements:
Canada: MSBs in Canada are required to submit regular financial reports, including annual financial reports and monthly large cash transaction reports.
United States: MSBs in the United States are required to submit various reports, including CTRs (Cash Transaction Reports) and SARs (Suspicious Activity Reports), as well as conduct monitoring and reporting of suspicious activities related to anti-money laundering and counter-terrorist financing.
Specific differences in compliance requirements:
Canada and the United States both have similar anti-money laundering and counter-terrorist financing compliance requirements, but the specific regulations and standards may be slightly different, so MSBs need to comply with the regulations of the country in which they are located.
MSB Registration Process in Canada:
Prepare documents and information: Before registration, you need to prepare necessary documents and information, including business plan, organizational structure information, business description, shareholder information, etc. You also need to appoint a compliance officer.
Submit a registration application: You need to submit an application for MSB registration to the Financial Intelligence Unit of Canada (FINTRAC). This can be done online and requires providing detailed business information and a compliance plan.
Fee Payment: When submitting your application, you will need to pay the relevant registration fee.
Compliance Training: After registration, you need to ensure that compliance officers and employees receive anti-money laundering and counter-terrorist financing training.
Compliance Policies and Procedures: Compliance policies and procedures that comply with AML/ATF regulations need to be established and implemented, including customer due diligence, transaction monitoring and reporting of suspicious activities.
Regular reporting: Financial reports need to be submitted to FINTRAC regularly
MSB registration process in the United States:
Obtain necessary licenses: Depending on the type of business, you may need to apply for a financial services license or a money transmission business license.
Register with FinCEN: All US MSBs are required to register with the Financial Crimes Enforcement Network (FinCEN) of the US Treasury Department. FinCEN Form 107 needs to be filled out to provide detailed business information and compliance plans.
Reporting requirements: MSBs in the United States are required to report large cash transactions and suspicious activity, including filing Cash Transaction Reports (CTRs) and Suspicious Activity Reports (SARs).
Compliance Policies and Procedures: Compliance policies and procedures that comply with the Bank Secrecy Act (BSA) need to be established and implemented, including customer due diligence, monitoring of transactions, and compliance reporting.
Regular training: Compliance officers and employees are required to receive anti-money laundering and counter-terrorist financing training.
