Buying an MSB in Canada: what to check

Why buy instead of register?

Some businesses prefer to acquire a Canadian company that's already registered with FINTRAC as a money services business, rather than registering a new one. It means starting from an established entity with a registration history. It costs more up front, and the due diligence matters as much as the price.

What to check before you buy

• Registration status: active, not expired or revoked, and listed on FINTRAC's public MSB registry.
• Registered services: do they match what you plan to offer? Adding services later means updating the registration.
• Renewal date: registration lasts two years. Know when it's next due.
• Compliance history: past examinations, findings, and any published penalties.
• Corporate records: ownership history, directors, and that the company is in good standing.
• Provincial rules: Quebec, for example, licenses money-services businesses separately.

After the purchase: updating FINTRAC

A registered MSB must tell FINTRAC within 30 days when its registration information changes. A change of ownership usually means several changes at once: owners, directors, senior management, and often the compliance officer and address.

FINTRAC requires criminal record checks for the chief executive officer, the president, directors and anyone owning or controlling 20% or more. Plan for these for the new people, especially if they live outside Canada, since checks must be dated within six months and translated if needed.

The obligations come with the company

The business still needs a compliance program that reflects its new owners, services and risks, a compliance officer with real authority, reporting to FINTRAC, record keeping, and renewal every two years. FINTRAC registration also doesn't guarantee banking or payment partners, which make their own decisions.