FINTRAC Interpretation Notice no. 1

May 20, 2008

Criteria for "Engaged in a Money Services Business"

This is to provide guidance regarding who is a money services business for purposes of Part 1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).

Effective June 23, 2008, if you are a money services business, you will have to be registered with FINTRAC. For more information, consult the Money services businesses (MSBs) pages.

Are you a money services business?

Effective June 23, 2008, a money services business means an individual or entity engaged in the business of any of the following activities:

A money services business includes an alternative money remittance system, such as Hawala, Hundi, Chitti, etc.

What is considered foreign exchange dealing?

Foreign exchange dealing is conducting transactions where any currency is exchanged for another. It does not include transactions where change is provided in Canadian currency after the purchase of goods or services (other than any of those in the above mentioned money services business activities) with foreign currency. Any bills, traveller's cheques, money orders, etc. provided in addition to the one(s) required to pay for the product or service would be considered a foreign exchange.

Example: A client purchasing a product with foreign currency (cash, traveller's cheque in a foreign currency, money order in a foreign currency, etc.) receives change from the purchase in Canadian currency. This would not be considered a foreign exchange transaction.

Example: A client provides two fifty US dollar bills as payment for a $20 CDN purchase. The Canadian currency provided for the first $50 US would be considered change; the Canadian currency provided for the second $50 US would be considered a currency exchange.

Money services business criteria

You are considered a money services business if any of the following apply to you:

Exceptions

You are not considered a money services business in the following situations:

Example: Paul remits and transmits funds solely as an agent for another money services business called ABC. He also uses ABC's exterior sign for advertisement. Although Paul conducts and advertises money services business activities, because he performs them solely as an agent for ABC, he is not considered to be a money services business.

Example: A securities dealer purchasing Canadian securities for a client receives funds from his or her client in Euros. This would not be considered foreign exchange dealing because the purchasing of securities for a securities dealer is an activity already subject to the PCMLTFA and regulations.

Date Modified: