Nowadays, Canada is one of the leading jurisdictions for conducting activities in the field of virtual assets. The exceptionally high interest of the public, an optimal taxation system, and regulatory clarity regarding activities in this sector have made the Canadian cryptocurrency market extremely attractive to investors.
The first obvious question would be is crypto legal in Canada? The primary authority governing and supervising Canada crypto regulation and crypto law in Canada is the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). In particular, it is responsible for checking compliance with all requirements to obtain an MSB license, which grants an entity the right to carry out the following types of financial services:
Money Transfers: Facilitating the transfer of money between individuals or entities, either domestically or internationally.
Foreign Currency Exchange: Offering services to exchange one currency for another.
Issuing or Redeeming Money Orders, Traveller’s Cheques, or Similar Instruments: Providing financial instruments that can be used as alternatives to cash.
Dealing in Virtual Currencies: Engaging in buying, selling, and trading cryptocurrencies, along with providing related services.
In general, FINTRAC requests the following information to obtain an MSB license:
- Company registration: Prior to seeking a Canada crypto exchange license, enterprises are required to register their business with the appropriate provincial or territorial authorities.
- Compliance with AML and KYC regulations: Adhering to anti-money laundering (AML) and know-your-customer (KYC) regulations is mandatory, necessitating the verification of customers’ identities and reporting any suspicious transactions.
- Financial viability: Demonstrating financial stability and solvency is essential for sustainable business operations.
- Implementation of security measures: Establishments must deploy robust security protocols to safeguard both client funds and sensitive data.
- Development of a business plan and risk assessment: Firms must furnish a detailed business plan along with a thorough risk assessment, outlining their operational strategies, services, and risk management protocols.
- Employment of qualified personnel: It is imperative for businesses to employ qualified personnel, including a Compliance Officer and Director, possessing relevant experience and expertise in the cryptocurrency sector.
- Establishment of physical presence: Crypto platforms in Canada must establish a physical office presence in Canada.
- Maintenance of good standing: All founders, shareholders, and employees must maintain good standing, with companies required to furnish regulators with certificates confirming a clean criminal record in their respective countries of citizenship.
If it is real to provide all the above information, all the procedures for obtaining an MSB license will involve a number of important steps:
- Registration a company in Canada, if not already present;
- Preparing the necessary documents and pre-registration with FINTRAC;
- Submitting the registration form to FINTRAC to obtain an MSB license.
Registration a company in Canada
The Canadian jurisdiction is known for its reliable reputation, which includes stable legislation that creates favorable conditions for conducting business. From the consumer’s perspective, this is an undeniable advantage that can be a significant argument for cooperation with a Canadian company.
Before registration, it is necessary to choose a province. For foreign companies, British Columbia is the most suitable.
Preparing the necessary documents and pre-registration with FINTRAC
The preparation stage involves meeting a series of requirements without which FINTRAC cannot register the company as an MSB. Ainsi, to meet this criterion, it is necessary to prepare a detailed description of the company, including the name, address, and other detailed information, contact details, and a description of the services to be provided.
After the above information is collected, the pre-registration stage begins. It includes filling out and submitting an information form, after which FINTRAC specialists create a personal account for further registration actions.
Submitting the registration form for obtaining an MSB license with FINTRAC
Successful creation of an account in the FINTRAC system means that the last stage has arrived – filling out and submitting the MSB form. It is important to be in compliance with the regulator’s requirements in terms of:
- banking details;
- information about the compliance officer;
- number of employees;
- information about registration (if the business is a corporation);
- information about the owners and senior management of the MSB, for example, their name and date of birth;
- an assessment of the expected total amount of transactions per year for each MSB service you provide;
- detailed information about each branch;
- detailed information about each MSB agent.
The process typically takes 3 to 4 months for application review.
Note that at each stage, it is necessary to ensure that all information provided is final and complete, as any inaccuracies can lead to delays or even rejection of the MSB license application.
After submission, FINTRAC will review your application and may request additional information or clarification if necessary. It is important to respond promptly to any requests from FINTRAC to avoid unnecessary delays in processing the application.
