Canada MSB License Record-Keeping Requirements Every Business Should Know

• It is important for every business to know the requirements for keeping a Canada MSB License Record. 

• In Canada, the regulatory requirements for money services businesses (MSBs) are stringent, designed to ensure transparency and contribute to anti-money laundering (AML) measures. Having a Canada MSB License is just the beginning; companies need to have robust compliance and documentation procedures in place. 

• Canada MSB License Record Keeping is one of the most critical compliance requirements, mandating businesses to keep thorough records of transactions, reports, and client activities as per FINTRAC guidelines. 

• Compliance issues, regulatory enforcement, and penalties can result from non-compliance with record keeping.  

What records do you have to maintain and what they should include?  

• As a registered MSB you are required to keep accurate and complete records of certain transactions and activities. 

• These records provide evidence of compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and can be used to verify your compliance program. 

• The following records are required to be retained and must include all necessary information, as per FINTRAC guidance. 

• Copies of all reports to FINTRAC must be kept, such as: 
  • Suspicious Transaction Reports (STRs)  
  • The Listed Person or Entity Property Reports  
  • The Listed Person or Entity Property Reports 
  • Large Cash Transaction Reports (LCTRs) 
  • Large Virtual Currency Transaction Reports (LVCTRs) 
  • Electronic Funds Transfer Reports (EFTRs) 

• Here is the detailed list of records that you need to maintain as per the FINTRAC Reporting Guidance 

Large Cash Transaction Records 

• If you receive cash of CAD 10,000 or more in a single transaction, you must keep and create a large cash transaction record. 

Large Virtual Currency Transaction Records 

• If you receive virtual currency of CAD 10,000 or more in one transaction, you must maintain a large virtual currency transaction record.  

• The records of transactions of CAD 3,000 if negotiable instruments have been issued in virtual currency. 

• Records must be kept when: 
  • You receive CAD 3,000 or more to issue negotiable instruments.  
  • You exchange one or more money orders for a total of CAD 3,000 or more in cash.  
  • You redeem one or more money orders for CAD 3,000 or more in virtual currency. 

Records of remitting and transmitting CAD 1,000 or more in funds by means other than an electronic funds transfer 

• You need to keep records when: 
  • You send CAD 1,000 or more in funds by any means other than an electronic funds transfer.  
  • You give a CAD 1,000 or more in funds to a beneficiary, except by electronic funds transfer. 

Records of Electronic Funds Transfers of CAD1,000 or More 

• Records must be kept when: 
  • You make an international electronic funds transfer of CAD 1,000 or more. 
  • You send an international electronic funds transfer of CAD 1,000 or more initiated by another reporting entity. 
  • You are the final recipient of an international electronic funds transfer of CAD 1,000 or more. 
  • The records of virtual currency transfers valued at CAD 1,000 or more are required to be kept. 

• You need to keep records when: 
  • You deposit virtual currency for CAD 1,000 or more. You are remunerated with virtual currency valued at CAD 1,000 or higher to a beneficiary. 

Foreign Currency Exchange Transaction Tickets 

• Transaction tickets must be created and maintained when foreign currency exchange transactions are made. 

Virtual Currency Exchange Transaction Tickets 

• When making a virtual currency exchange transaction, you must maintain transaction records. 

Crowdfunding Platform Services Records 

• Records must be kept when providing services as a crowdfunding platform. 

Internal Memorandum Records 

• Records must be kept when internal memorandums are made or received. 

Service Agreement Records 

• You need to keep records whenever you enter into an agreement to provide a money services business service. 

Transport Records 

• Records must be kept when: 
  • You transport CAD 1,000 or more in cash or virtual currency.  
  • You carry negotiable instruments for CAD 3,000 or more.  
  • You carry an undetermined quantity of cash, virtual currency, or negotiable instruments.  

Cheque Cashers Records 

• You need to keep records whenever you cash one or more cheques that total CAD 3,000 or more. 

Acquirer Services Records 

• You need to keep records whenever you provide acquirer services in relation to a private automated banking machine. 

What are your responsibilities in maintaining records? 

• Maintaining the records is not just about gathering data. You also have to make sure that records are available and accessible when called for by regulators. 

• In order to meet the FINTRAC requirements, records must be kept in a way that makes it possible to provide them to FINTRAC within 30 days of a request. 

• Records can also be obtained by law enforcement in an investigation of money laundering or terrorist financing pursuant to a judicial order. 

• Records may be maintained in machine readable or electronic format. But you must make sure that a hard copy is readily available when needed. 

• If you have employees or contractors who keep records for you, you must get those records prior to the end of your employment or contract. After the relationship has terminated, those people are no longer required to keep records for you. 

• It is also important to keep in mind that other federal or provincial regulators may have other record retention requirements. You must also comply with any other regulator’s requirements if they ask you to hold records for a longer period. The retention period may not be less than the period required in FINTRAC regulations, however. 

Exceptions to the record keeping requirements  

• There are some exceptions to record keeping requirements. 

• When information needed in one record is already readily available in another record, do not re-enter the information. 

• There is no requirement to keep a large cash transaction record or a large virtual currency transaction record when the cash or virtual currency is received: 
  • From a financial institution. 
  • From a public body 
  • From a person acting on behalf of a client that is a financial entity or public body. 

• Likewise, service agreement records are not required if an agreement is only for the transportation of cash, virtual currency, money orders, traveller’s cheques, or similar negotiable instruments between: 
  • The Bank of Canada and an individual or entity in Canada 
  • Two financial entities 
  • Two business locations of a reporting entity at its request 

Conclusion 

• One of the most critical compliance requirements for any business that is licensed under a Canada MSB License is record keeping. At all times, you must keep accurate records, make them available for timely access, ensure supporting documentation is kept and adhere to FINTRAC’s reporting and retention requirements. 

• The above requirements are some of the most significant requirements of Canada MSB License Record Keeping. But setting up a compliant record-management system can be a complex process, particularly for cross-border transactions, virtual currency operations, reporting requirements, and continuous compliance monitoring. 

• Tetra Consultants can help your business from Canada MSB registration to compliance with FINTRAC requirements, to implementing AML policies, to record-keeping, and ongoing regulatory support.  

• Contact us and our team will revert back in 24 hours.