MSB obligations following registration: AML, KYC, reporting and record-keepingMSB Responsibilities in Canada: AML, KYC and Reporting 2026 | Intelligent Solution Group

Many entrepreneurs believe that obtaining an MSB license marks the final stage in the legalisation of their business. Canadian legislation regards the license merely as a ‘mark of trust’. The real work begins at the post-registration compliance stage.

If your company has already obtained its Money Services Business (MSB) license, it is crucial to establish an internal control system to avoid fines and licence revocation. 

If you are only planning to enter the market, we recommend familiarising yourself in advance with the requirements for obtaining an MSB license in Canada — this will help you ensure compliance from day one.

Let’s take a step-by-step look at the obligations that fall on the business.

AML/ATF Compliance Framework: The Foundation of Security

Every company with Money Service Business status is required to develop and implement an anti-money laundering (AML) and counter-terrorist financing (CTF) programme.

This is not merely a set of documents, but a functioning ecosystem that includes:

1. Appointment of a Compliance Officer: there must be an employee, either in-house or outsourced, responsible for compliance with FINTRAC regulations.  
2. Risk assessment: regular analysis of the extent to which your services or client geography are exposed to financial crime.
3. Staff training: all employees must understand why an MSB license is required and how to recognise suspicious activity.
4. Biennial audit: a mandatory review of the effectiveness of your AML programme by an independent expert.

Identity verification and KYC for MSBs

The ‘Know Your Customer’ (KYC for MSBs) procedure has become more technology-driven in 2026. It is no longer sufficient simply to see a passport.

Requirements for Money Services Businesses include:

1. Customer identification: verification of identity documents when conducting transactions above specified thresholds (typically from CAD 1,000).
2. Beneficial Ownership: if your customer is a legal entity, you are required to identify all natural persons who directly or indirectly own 25% or more of the company’s shares.  
3. PEP and HIO checks: identification of Politically Exposed Persons (PEPs) and Heads of International Organisations (HIOs). Dealing with them requires heightened scrutiny and approval from senior management.
4. Business Relationship: understanding the client’s objectives. If a client carries out regular transactions, you must document the nature of your business relationship.

Reporting to FINTRAC

Even if you know how to obtain an MSB license, errors in your reports can lead to sanctions. The main types of reports are:

• Suspicious Transaction Reports (STR): a report must be filed if there are reasonable grounds to believe that the funds are linked to criminal activity.
• Large Cash Transaction Reports (LCTR): reporting the receipt of cash totalling CAD 10,000 or more within a 24-hour period.
• Large Virtual Currency Transaction Reports (LVCTR): a crucial requirement if an MSB license has been obtained for a cryptocurrency exchange. Any receipt of the equivalent of CAD 10,000 in cryptocurrency must be recorded.

Errors during the registration stage often lead to reporting issues, so it is important to complete the MSB registration process correctly from the outset for financial companies.

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Recordkeeping: Data retention rules

Every company operating under the jurisdiction of MSB Canada is required to retain records of its activities for a period of five years.

What exactly must be retained?

• copies of customers’ identification documents;
• records of each transaction (date, amount, currency, sender/recipient details);
• records of internal investigations into suspicious transactions;
• logs of checks against sanctions lists.

Compliance with these rules ensures that, in the event of an audit by the regulator, you will be able to confirm the legality of every transaction. For those just planning to launch, the Canadian Money Services Business license for payment systems from Intelligent Solution Group includes basic consultancy on setting up these processes.

A Canadian MSB license is a powerful tool, but it requires discipline. A properly structured Money Services Business compliance framework not only protects you from the regulator but also enhances your business’s valuation in the eyes of investors and banking partners.

Whether you need help developing AML policies or are simply exploring how to set up a Money Services Business, the Intelligent Solution Group team will provide support at every stage — from applying for an MSB license to setting up daily reporting.