Crowdfunding platforms and certain payment service providers must register with FINTRAC
Following last April's Notice about amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR) and the Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Monetary Penalties (PCMLTFAMP) Regulations, we wish to remind reporting entities that crowdfunding platforms and certain payment service providers are covered as money services businesses (MSBs) or foreign money services businesses (FMSBs) under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). This means that businesses engaged in crowdfunding platform services and certain payment services have MSBs or FMSBs obligations under the PCMLTFA, including the need to register with FINTRAC. For detailed information about these obligations, see information about MSBs and FMSBs.
Further to these amendments, FINTRAC has retracted its position with respect to merchant servicing and payment processing (PI-7670).
Pursuant to paragraphs 5(h)/(h.1) of the PCMLTFA, a person or entity is an MSB or FMSB (subject to additional criteria) if engaged in the business of providing any of the following services:
- Foreign exchange dealing (conducting transactions where one fiat currency is exchanged for another fiat currency);
- Remitting or transmitting funds by any means or through any person, entity or electronic funds transfer network;
- Issuing or redeeming money orders, traveller's cheques or other similar negotiable instruments (except for cheques payable to a named person or entity);
- Dealing in virtual currency, which includes both virtual currency exchange and value transfer services; or
- Any prescribed service.
Reference: PCMLTFA, S.C. 2000, c 17, s. 5(h), PCMLTFRR, SOR/2007-121, s. 1 and PCMLTFR, SOR/2002-184, s. 1(2).
As payment services are not a prescribed service under the PCMLTFA, FINTRAC is taking the position that persons or entities that provide invoice payment services or payment services for goods and services are engaged in the business of remitting or transmitting funds, or dealing in virtual currency.
If a person or entity's activities include the following, they are engaged in providing MSB services and are subject to the PCMLTFA as an MSB or FMSB (subject to additional criteria).
Invoice payment services
A person or entity is providing invoice payment services when they act as an intermediary between a payer and a payee to make payments to invoices, such as those pertaining to utilities, payroll and commission, mortgage and rent, or tuition.
Exception: A person or entity that solely receives payments on behalf of the payee to settle a debt, and does not further transfer the payment instructions to the original payee.
Payment services for goods and services
A person or entity is providing payment services for goods or services when:
- they receive payment instructions and act as an intermediary between a payer purchasing goods or services and a payee supplying goods or services;
- the payer consents to make the payment for the goods or services through them; and
- the payee has an agreement with them to have access to the transfers carried out as payment for the goods or services.
- A person or entity that solely accepts a payment for goods or services that they supplied to their own customer.
- A person or entity that solely provides hardware (for example, a physical payment terminal), and does not offer any other associated payment services
FINTRAC is currently working with businesses to register certain payment service providers over the next several weeks. The regulatory amendments and FINTRAC's retraction of its previous positions may also affect MSBs and FMSBs already registered with FINTRAC.
Registering with FINTRAC as an MSB or FMSB
Crowdfunding platforms that provide services to raise funds or virtual currency and certain payment service providers must register as MSBs or FMSBs.
MSBs and FMSBs that are already registered with FINTRAC, and which offer services now subject to the Act, must update their registration information to reflect this.
For information on how to register as an MSB/FMSB, visit the following pages on our website:
- Check to see if you need to register with FINTRAC
- Register your MSB or FMSB with FINTRAC
- Update your registration information with FINTRAC
We understand that there will be challenges in meeting certain obligations. FINTRAC will be reasonable in its assessment and enforcement approach, and is committed to working with reporting entities subject to the PCMLTFA and its Regulations to increase their awareness, understanding and compliance with their obligations. Please continue to monitor our website for updates or additional guidance.
For questions, please contact FINTRAC by telephone at 1-866-346-8722 (toll free) or by email at firstname.lastname@example.org.
- Date Modified: