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CANADIAN MSB GUIDE

Crypto MSB Registration in Canada

A business dealing in virtual currency can fall within Canada's MSB framework. FINTRAC describes dealing in virtual currency as including virtual-currency exchange and value-transfer services.

Registration is only one layer of the launch. A crypto MSB needs an operating model that identifies where value enters, who controls it, how wallets are used and which checks, records and reports apply at each stage.

This guide explains the main registration and compliance work for exchanges, OTC desks, brokers, transfer services and mixed fiat-to-crypto models.

Which crypto activities can trigger MSB obligations

FINTRAC includes both virtual-currency exchange and value-transfer services within dealing in virtual currency. A business should examine the substance of each activity rather than relying on labels such as platform, broker, software provider or marketplace.

The same project may include remitting or transmitting funds in addition to virtual-currency activity. Each customer and transaction journey should be mapped separately so the registration and compliance program cover the actual services.

  • Fiat to virtual currency exchange
  • Virtual currency to fiat exchange
  • Virtual currency to virtual currency exchange
  • Transfers of virtual currency
  • OTC and brokered transactions
  • Mixed fiat and virtual-currency payment flows

Canadian MSB or foreign MSB

A crypto business with a place of business in Canada can be a Canadian MSB. A business without a place of business in Canada may be an FMSB if it directs covered services at persons or entities in Canada and provides them to clients in Canada.

A Canadian website, CAD pricing, Canadian customer support or promotion into Canada can contribute to the direction-of-services assessment. The correct route should be decided before registration copy, customer terms and compliance documents are finalized.

  • Place of business
  • Customer location and Canadian connection
  • Marketing and availability in Canada
  • Contracting entity
  • Custody, control and settlement roles

Build the wallet and funds-flow map first

A crypto compliance program needs more detail than a list of coins. Document the wallets, blockchains, fiat accounts, counterparties and vendors used at every stage. Identify when the MSB receives, controls, converts and releases value.

The map should distinguish customer wallets, corporate wallets, custodial providers, liquidity venues and settlement accounts. It gives the risk assessment, monitoring rules and recordkeeping procedures a common factual base.

  • Hosted and unhosted wallets
  • Custodial and non-custodial roles
  • Fiat funding and payout accounts
  • Liquidity providers and exchanges
  • Blockchain analytics and transaction monitoring
  • Manual approvals and exception handling

KYC, beneficial ownership and risk controls

The compliance program should define when identity is verified, how entities and beneficial owners are assessed and what additional steps apply to higher-risk relationships. It should also cover geography, delivery channels, new technology and the specific exposure created by the supported assets and services.

Controls must be implementable. State who reviews an alert, which data the analyst sees, when a transaction is paused or escalated and where the decision record is retained.

  • Individual and entity verification
  • Beneficial ownership
  • Source-of-funds and source-of-wealth escalation
  • Sanctions and adverse-information screening
  • Wallet and counterparty risk
  • Enhanced measures for high-risk relationships

Virtual-currency records, reports and travel rule

FINTRAC requires a large virtual currency transaction record when virtual currency equivalent to CAD 10,000 or more is received, subject to the 24-hour rule. Other reporting and recordkeeping duties can apply depending on the facts of the transaction.

The travel rule applies to covered virtual-currency transfers and requires specified originator and beneficiary information to accompany or be obtained for the transfer. Procedures should explain how missing information is handled and when a transaction is rejected, suspended or escalated.

  • Large virtual currency transaction records
  • Suspicious transaction reporting
  • 24-hour aggregation considerations
  • Travel-rule information
  • Exchange-rate source and valuation
  • Retention of transaction and decision evidence

Registration does not replace operational readiness

FINTRAC registration is not an endorsement, a crypto licence or a guarantee of banking. The business still needs technology, vendors, trained staff, monitoring and a launch plan capable of putting the documented controls into practice.

MSB Desk coordinates the registration description and business-specific AML/ATF program around the same wallet and funds-flow model, then identifies the remaining banking, provider and implementation work before launch.

  • Registration and clarification support
  • Crypto-specific risk assessment
  • AML/ATF policies and procedures
  • Training and effectiveness-review framework
  • Banking and provider onboarding preparation

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