Starting a money service business (MSB) in Canada comes with various requirements and expectations. One such requirement you may have heard about is Canadian physical presence.
FINTRAC grants licenses for MSBs that have physical presence in Canada. But what does this really mean?Â
What is Canadian MSB Physical Presence?
Canadian physical presence means having a real and functional company presence in the country. This doesn’t necessarily mean having a team of full-time employees.
However, requirements such as having a private office must be met for establishing physical presence. You can do so by buying an office or leasing commercial office space. An alternative to save money while maintaining Canadian MSB compliance is leveraging our fractional AML service, which includes a private office space as part of the service!
Is Canadian MSB Physical Presence Mandatory?
Canadian MSB physical presence is mandatory for obtaining a FINTRAC MSB license. It’s not an optional task that you can skip in order to stay lean and save costs.Â
What Does FINTRAC Expect From Canadian MSB Physical Presence?
People believe having a PO box in Canada is enough to establish physical presence. That’s a misconception. FINTRAC expect more than that from you:
- Physical MSB Location in Canada
A private physical address is a key requirement for cheque cashers, PSPs, and crypto asset providers wanting a FINTRAC MSB license. Virtual offices and mailboxes don’t count as MSB location.
You need to have a proper space, such as a rental or owned office. This location will serve as a point of contact for FINTRAC when leading investigations or reviews against your MSB.
- On-Site Staff
An empty physical office isn’t sufficient to satisfy the expectations of FINTRAC. The regulator requires that you appoint workers to your private address. An employee or contractor must be present at the location during business hours for a properly-established physical presence.
What Does Banking Partners Expect From Canadian MSB Physical Presence?
Banking partners such as the big 5 Canadian banks, tier two banks, EMIs, and more also have certain expectations. These include:
- Physical Canadian MSB Location
Just like FINTRAC, banks in Canada also prefer that MSBs have a physical address in the country. Cheque cashers or PSPs that don’t have a proper office face the risk of onboarding rejection from banks.Â
- Proof of Operations From MSB Location
Banking partners take Canadian MSB physical presence to the next level by requiring proof of operations. This proof may be:
- Electricity bill for your physical office
- Active lease or rental agreement copy
- A bank statement issued to your address
- A Canadian Revenue Agency (CRA) or government letter addressed to your company at its office in the country
A nil electricity bill can put your onboarding at risk because it may prove you don’t operate at the mentioned physical address. Meanwhile, solid proof of operations will make it easy to get banked.
- Local Compliance Team
Both FINTRAC and banking providers prefer compliance officers for your MSB to be based in Canada. They want your MSB to operate on a foundation of solid AML polices, administered and supervised by local compliance team in your listed, real office address.Â
Many MSBs may find this challenging to meet, however, our Fractional AML solution allows you to check all of these boxes with ease.
Why is Canadian MSB Location Preferred by FINTRAC and Banks?
Canadian MSB physical presence is required by FINTRAC and preferred by banking partners because:
- Easy accessibility compliance officers and team
- Better security standards and accountability if the company engages in non-compliant behavior crimes
- Enhanced client confidence
If you don’t meet the expectation of physical MSB location, you may risk cancellation of MSB registration, refusal of bank accounts, and reputational risks.
Fractional AML Service: Establish Physical Presence Without a Retail Office
Our firm supports domestic and international MSBs with a robust fractional AML service involving:
- Office Setup and Verification
- Private physical office addresses
- Proof-of-address documents for banks and regulators
- Dedicated contact available during business hours
- Compliance Program Support
- Design and implementation of AML programs
- Ongoing reporting, training, and audits
- Appointment of experienced Canadian compliance officers
- Bank-Ready Documentation
- Pre-onboarding file reviews
- Creation of compliance officer bios and org charts
- Guidance on bank interviewsÂ
Whether you’re registering a new MSB or upgrading an existing operation, we ensure your business meets expectations from both FINTRAC and banking partners.
Act now to Prepare for Future Compliance with MSB Physical Presence
If you want to operate a credible MSB in Canada and especially if you want to open a Canadian bank account, then local physical presence is non-negotiable.Â
Contact us today if you need help setting up Canadian operations, proving your presence, or appointing a qualified compliance team that meets FINTRAC and banking standards.
