Канадская лицензия MSB

Canada is an attractive jurisdiction due to the flexible requirements set by the government for financial services companies, compliance with global regulatory standards, and a high level of legal protection. Fionza Consulting provides professional support and obtains a Canadian MSB license with a turnkey solution and guarantee.

Financial businesses that provide services to customers must comply with Canadian law to help detect criminal activity and combat money laundering. In Canada, there are two types of financial businesses subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) obligations: Foreign Money Service Business (FMSB) and Money Service Business (MSB).

An FMSB is a non-bank financial institution providing financial services and may be located outside Canada. In contrast, an MSB offers financial services domestically. Both FMSBs and MSBs must register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and comply with their reporting and recordkeeping obligations under the PCMLTFA. Fionza Consulting provides professional support to help businesses obtain a Canadian MSB license with a turnkey solution and guarantee.

Who Qualifies as a Money Services Business (MSB)?

A business will be classified as an MSB (money services business) if it meets the following criteria:

Provision of MSB Services: Your business provides clients with at least one of the following services:

Currency Transactions: Engaging in currency exchanges.

Funds Transfers: Facilitating funds transfers, including bank card transfers.

Financial Mediation: Mediating financial transfers between entities or individuals, and mediating payments for bills, utilities, wages, mortgages, loans, etc. (excluding accepting payments exclusively for debt settlements).

Issuance or Redemption of Negotiable Instruments: Issuing or redeeming money orders, traveler’s checks, or similar negotiable instruments (excluding cashing checks made out to a particular person or merely selling traveler’s checks issued by another company).

Virtual Currency Services:

Exchanging fiat currency for virtual currency.

Exchanging one type of virtual currency for another.

Transferring or receiving virtual currency.

Providing or maintaining a crowdfunding platform for raising funds or virtual currency.

Operational Presence in Canada:

Conducting business in Canada.

Maintaining a physical office in Canada.

Employing staff and agents in Canada.

Operating a branch office in Canada.

Additionally, your company may be designated as an MSB in the following scenarios:

Licensing and Registration: If you hold a license or are registered to provide any of the aforementioned services.

Advertising: Attracting customers through advertising mediums such as media, the Internet, outdoor ads, etc.

Service Provision Without Advertising: Even without advertising, if you provide financial remittance services, foreign exchange transactions exceeding $1,000 per transaction per customer, or issuance/redemption of money orders, traveler’s checks, or similar instruments over $1,000 per transaction per customer (including cumulative smaller transactions totaling $1,000 or more).

Taxation: Paying taxes on profits derived from any of the above services.

Fionza Consulting offers expert support to help businesses navigate these requirements and obtain a Canadian MSB license with a turnkey solution and guarantee.

Who Qualifies as a Foreign Money Services Business (FMSB)?

A business will be classified as a Foreign Money Services Business (FMSB) if it meets the following criteria:

Provision of MSB Services: Your business provides any of the services that qualify as an MSB, but:

No Physical Presence in Canada: Your business does not have a physical place of business in Canada, meaning:

No Canadian registration.

No physical presence.

No employees, agents, or affiliates in Canada.

Services Provided to Canadian Clients: Your business provides services to individuals or entities in Canada, which can be identified by at least one of the following factors:

Targeted Marketing: Engaging in marketing or advertising specifically targeting individuals or entities in Canada.

Canadian Domain: Managing a “.ca” domain name.

Canadian Business Listings: Having the company listed in the Canadian Business Directory.

Determining Canadian Customers: Your company’s services are used by customers in Canada, identified by the following criteria:

Customer has a Canadian residential address.

Customer has documents issued by the Canadian government.

Customer uses bank cards issued by a Canadian bank.

Customer is temporarily living, working, studying, or vacationing in Canada.

MSB License Requirements in Canada

To obtain a Money Services Business (MSB) license in Canada, businesses must meet the following requirements:

1. Physical Office: The company must establish a physical office in Canada.
2. Registration with FINTRAC: The business must be registered with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
3. AML/CTF Policies: Compile and adhere to Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) policies, including risk control and monitoring rules.
4. Client Compliance: The company must comply with client identification, record keeping, and reporting regulations.
5. Good Standing of Personnel: All founders, shareholders, and employees must be in good standing. Companies need to provide certificates of non-criminal record from their country of citizenship to the regulator.
6. Compliance Officer: Companies must appoint a compliance officer responsible for developing and ensuring adherence to AML/CTF policies.
7. Monitoring and Reporting: Entrepreneurs must monitor suspicious transactions and report relevant information to government agencies.
8. Experienced Director: At least one director with economic experience must be appointed to the company.

Procedure for Obtaining an MSB License in Canada

Stage 1: Collection of Documents from the Client

Timeline: Up to 2 weeks

Objective: To gather essential information and prepare preliminary documents to initiate the licensing process.

Preliminary Project Analysis

Gather Basic Information: Collect initial data about the client’s business operations and objectives.

Define Project Scope and Budget: Provide clarity on the project’s scope and associated budgets.

KYC Collection and Business Description

Know Your Customer (KYC): Collect detailed information about the client’s identity, business structure, and operational model.

Business Description: Prepare a comprehensive description of the client’s business activities, services offered, and target market.

AML/CTF Policy Preparation

Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) Policies: Develop and compile the necessary AML/CTF policies tailored to the client’s business.

Stage 2: Registering a Business in Canada

Timeline: 4-6 weeks

Objective: To officially register the company in Canada, establishing its legal presence and fulfilling initial regulatory requirements.

Choose a Name for the Company

Company Name Selection: Select and approve a unique name for the company, ensuring it complies with Canadian naming regulations.

Rent an Office and Sign an Agreement

Office Rental: Secure a physical office space in Canada and finalize the rental agreement to establish a legal address.

Determine Share Capital

Share Capital Determination: Decide on the amount of share capital needed for the company’s operations and register it accordingly.

Prepare a Set of Corporate Documents Certified by a Notary

Corporate Documentation: Compile and prepare all necessary corporate documents, ensuring they are certified by a notary.

Appoint Employees with Financial Expertise

Employee Appointments: Appoint key employees with the required financial expertise to meet regulatory and operational standards.

Result: The company is registered under the approved name, and the legal address is established.

Stage 3: Opening a Bank Account

Timeline: 4-5 weeks

Objective: To open a corporate bank account, ensuring the organization meets the requirements of tax authorities and regulatory bodies as a virtual asset service provider.

Preparation of Notarized Documents

Document Preparation: Gather and prepare all necessary corporate documents, ensuring they are notarized for authenticity and compliance.

Preliminary Talks with the Payment Institution and Account Opening Process

Preliminary Discussions: Engage in preliminary discussions with the chosen payment institution to understand their requirements and process for opening a corporate account.

Account Opening Process: Complete the formal process for opening the corporate bank account, providing all required documentation and information.

Payment of Share Capital

Share Capital Payment: Deposit the determined share capital into the newly opened corporate account, ensuring compliance with regulatory and operational requirements.

Result: A corporate account is opened, ensuring the organization complies with the tax authorities and supervisory bodies as a provider of virtual assets.

Stage 4: Submitting Documents for an MSB License

Objective: To submit the application for an MSB license, ensuring the company operates within the legal framework of Canada.

Preparing and Adapting Documents for AML/CTF Cryptocurrency Company Operations

Document Preparation: Prepare and adapt all necessary documents, specifically tailored for AML (Anti-Money Laundering) and CTF (Counter-Terrorist Financing) operations relevant to cryptocurrency activities.

Search, Employment, Training, and Adaptation of Employees

Employee Search and Employment: Hire qualified employees with the necessary expertise.

Training and Adaptation: Train and adapt employees to ensure they are well-versed in compliance and operational procedures.

Submission of License Application

Application Submission: Submit the comprehensive application for the MSB license, including all prepared documents and relevant information.

Collecting Additional Documentation as Requested by the FINTRAC Representative

Additional Documentation: Gather any additional documents requested by the FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) representative to support the application.

Negotiating with FINTRAC Representative

Negotiations: Engage in discussions with the FINTRAC representative to address any queries or concerns regarding the application.

Compliance with FINTRAC Representative Requirements

Ensure Compliance: Adhere to all requirements set forth by the FINTRAC representative to secure the MSB license.

Stage 5: Registration Process

Timeline: Up to 4 weeks (unless a clarification request is sent to the applicant following the submission)

Objective: To finalize the application process and obtain the MSB license, ensuring the company is listed in the registry of licenses.

Submitting the Documents to FINTRAC

Document Submission: Submit all required documents to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), ensuring everything is complete and accurate.

Leading the Client and Conducting Negotiations with the Regulator

Client Guidance: Provide continuous guidance to the client, assisting them through every step of the process.

Regulator Negotiations: Engage in negotiations with the regulator on behalf of the client, addressing any questions or issues raised by FINTRAC.

Full Support During the Entire Process Until Registration is Accomplished

Ongoing Support: Offer full support to the client throughout the entire registration process, ensuring all regulatory requirements are met and facilitating any additional steps needed for compliance.

Result: Obtaining an MSB license and the company’s appearance in the registry of licenses.

Taxation for Money Services Businesses (MSB/FMSB) in Canada

Taxation for Money Services Businesses (MSB/FMSB) in Canada, especially those involved in cryptocurrency activities, follows specific guidelines under the Income Tax Act (ITA) and provincial tax regulations. Here’s a breakdown of key taxation considerations:

Income Tax Act (ITA) and Cryptocurrency

Classification of Cryptocurrency: In Canada, cryptocurrency is considered an asset, not a legal tender. Therefore, transactions involving cryptocurrency are subject to taxation under the ITA.

Tax Rates: The applicable tax rate depends on the annual income:

Tax rates range from 15% to 33% based on the total income earned by the business.

Tax Treatment of Cryptocurrency Transactions:

Barter Transactions: When customers pay for services or goods with cryptocurrency, it’s treated as a barter transaction. The value of the cryptocurrency received should be included in the seller’s income for tax purposes.

Province-Specific Tax Considerations:

British Columbia: Companies registered in British Columbia benefit from favorable tax treatment:

The corporate income tax rate is 12% (applies to income over CAD 300,000).

A tax credit reduces the rate to 2% for income up to CAD 300,000.

Income generated outside Canada is taxed at 0%.

Federal Tax Obligation: All Canadian companies, including MSBs and FMSBs, are subject to federal corporate income tax at a rate of 15%.

Capital Gains vs. Business Income:

Business Income: 100% of earnings from cryptocurrency activities are taxed as business income.

Capital Gains: If reported as capital gains, only 50% of the profits are taxable, providing a potential tax advantage.

Reporting Requirements: Entrepreneurs must:

Regularly compile reports on cryptocurrency transactions.

Report profits or losses from buying, exchanging, or selling digital currencies on their tax returns.

Include transaction dates and Canadian dollar values at the time of each transaction.

Conclusion

Understanding and complying with Canadian tax laws are crucial for MSBs and FMSBs, particularly those involved in cryptocurrency activities. Fionza Consulting provides expertise in navigating these regulations, ensuring businesses adhere to tax obligations while maximizing tax efficiencies where possible. Regular reporting and accurate record-keeping are essential to maintain compliance with the Income Tax Act and provincial tax regulations in Canada.