U.S. banks are notoriously risk-averse when it comes to foreign MSBs, citing regulatory exposure, operational overhead, and perceived AML risk. This blog breaks down the exact steps Canadian MSBs can take to obtain banking access in the U.S.—and the critical pitfalls to avoid.

Why U.S. Banking Access Matters for Canadian MSBs

Operating as a Canadian MSB with clients, counterparties, or payout destinations in the U.S. typically requires access to:

• USD settlement accounts

• Correspondent banking relationships

• ACH and wire transfer capabilities

• SWIFT messaging or access via a partner bank

Without access to U.S. rails, MSBs face delays, elevated FX costs, and limited remittance coverage. Many international clients also require assurance that funds will clear through U.S.-regulated institutions—especially for compliance with U.S. sanctions and OFAC regulations.

Step 1: Solidify Canadian Regulatory Position

Before approaching a U.S. financial institution, ensure that your Canadian compliance framework is airtight. This includes:

• Active and up-to-date MSB registration with FINTRAC

• A qualified and documented CAMLO/MLRO

• A completed Effectiveness Review if your business has operated more than two years

• Clear AML policies aligned with FATF and OFAC—not just Canadian PCMLTFA standards

• RPAA registration with the Bank of Canada if operating as a PSP serving Canadian end users.

Tip: Address U.S.-specific concerns such as sanctions screening, PEP risk, nested transactions, and correspondent account exposure.

Step 2: Select Your U.S. Banking Strategy

There are four common pathways for Canadian MSBs to access U.S. banking infrastructure:

1. Direct Account with a U.S. Bank

• High barrier to entry, especially without a U.S. legal entity

• Requires full due diligence, including AML policy review, UBO declarations, transaction mapping, and ongoing audits

• Typically limited to MSBs with pristine records and substantial volume

2. U.S. Money Transmitter Licensing (MTL)

• Not legally required if you're not offering services directly to U.S. residents

• However, holding one or more state licenses significantly improves onboarding success

• Expect legal, bonding, and in-state agent costs per jurisdiction

3. FinTech Sponsor Bank or BaaS Partner

• Use a regulated U.S. financial institution as your platform or payout layer

• Often done via BaaS platforms or crypto-compliant sponsor banks

• Lower upfront risk but may limit product customization and revenue share

4. Correspondent Banking via Canadian Bank

• Some large Canadian banks maintain U.S. correspondent accounts

• Ideal for established MSBs with multi-jurisdiction oversight and proven controls

• Access to SWIFT corridors or USD settlement may still be indirect

Step 3: Prepare Your Bank Due Diligence Package

To secure onboarding, prepare a comprehensive documentation package that includes:

• Articles of incorporation and shareholder register

• FINTRAC MSB registration certificate and renewal history

• AML/ATF program (with FATF, OFAC, and sanctions risk sections)

• KYC templates, SAR procedures, and onboarding workflows

• Description of payment corridors, client base, and currencies

• Organizational chart and CAMLO bio

• Sample transaction monitoring reports

• Sanctions screening policies covering OFAC, UN, EU, and local lists

• Licensing documents (if holding a U.S. MTL or similar)

If you operate in crypto or tokenized payments, include:

• Token Due Diligence methodology

• Wallet monitoring policies (e.g., use of on-chain analytics tools)

• NFT or smart contract risk assessments if applicable

Step 4: Build a Bank Relationship Over Time

A bank account is not a one-time achievement—it’s a living relationship that must be maintained. Best practices include:

• Monthly compliance summaries and transaction volumes

• Proactive updates about business model changes or new corridors

• Rapid turnaround time for document requests and audits

• Demonstrated improvement from past effectiveness reviews or regulator feedback

• Use of EDD Services to manage high-risk clients or complex flows

Common Pitfalls That Get Canadian MSBs Rejected

1. AML policies that only reference Canadian laws and ignore FATF or U.S. requirements

2. No U.S. presence—making regulator or audit coordination more difficult

3. Inconsistent or vague customer due diligence (CDD) procedures

4. Weak transaction monitoring with no behavioral thresholds or typology flagging

5. Use of high-risk jurisdictions with unclear source-of-funds documentation

6. Overuse of shell partners or resellers with insufficient control

7. Lack of transparency on who performs and reviews compliance functions

Compliance Tools and Localization

To reduce onboarding friction:

• Use KYC providers accepted in the U.S. and Canada, ideally with SOC 2 or ISO certifications

• Be transparent about where client data is hosted and processed—especially when using offshore platforms

• Align your data protection policies with both PIPEDA and U.S. expectations

U.S. De-Risking Is Still a Factor—But It’s Changing

It’s true that many U.S. financial institutions continue to de-risk MSBs entirely. But the trend is shifting. MSBs that demonstrate:

• Clean operational and compliance history

• Narrow corridor focus

• Advanced transaction monitoring and transparency

• Willingness to pay premium compliance fees (often $500–$3,000/month)

...can still secure stable banking access through MSB-friendly institutions, sponsor banks, or RegTech partnerships.

In some cases, partnering with a firm offering Regulatory Remediation can unlock access by demonstrating internal improvement.

Final Thoughts: Prepare to Overcomply

To access U.S. rails, Canadian MSBs must treat compliance as a core asset, not a legal formality. That means:

• Documentation must be current, auditable, and robust

• Cross-border exposure must be actively monitored

• Sanctions, crypto, and customer risk must be addressed in real time

• Bank relationships must be cultivated like client relationships

AML Incubator offers full-service support for Canadian MSBs seeking U.S. banking access. From documentation packages to onboarding and sponsor introductions, we support your compliance journey from end to end.

Your Trusted Partner in Regulatory Excellence.