This guide walks founders and C-level decision-makers through the essentials of registering, monitoring, and managing risk as a crypto MSB in Canada.

Understanding Crypto MSBs Under Canadian Law

In Canada, any business that deals in virtual currency for clients must register as an MSB with FINTRAC. This includes a wide variety of crypto-focused models:

If your business receives, transmits, or holds virtual currency on behalf of users, it must register as an MSB.
Even if your business is incorporated outside Canada, registration is required if you offer services to Canadian residents or enable them to transact on your platform.

Step 1: FINTRAC MSB Registration

Your crypto business must be registered with FINTRAC before offering services to Canadian residents. The registration process includes:

• Submitting a structured MSB registration form

• Disclosing business ownership, structure, and services

• Appointing a qualified CAMLO (Chief AML Officer)

• Developing and filing a compliant AML/ATF Program

• Passing suitability checks on beneficial owners and officers

You can begin with MSB Registration support from AML Incubator to ensure the process is smooth, compliant, and strategically aligned.

If your services also qualify as retail payment activities (e.g., fund transfers, wallet deposits), you may be required to register under the Retail Payment Activities Act (RPAA) with the Bank of Canada.

If your crypto service resembles securities dealing, you may also need to consult with provincial regulators or the OSC/CSA, though that’s less common for non-custodial models.

Step 2: Establish a Real Compliance Program

MSB registration is just the beginning. Canadian crypto MSBs must maintain an ongoing AML compliance program, including:

• Written policies and procedures tailored to your services

• A CAMLO/MLRO responsible for daily compliance oversight

• A documented risk assessment

• Ongoing training for all relevant staff

• Effectiveness testing (at least every two years)

This applies equally to fully remote and hybrid companies. FINTRAC has made clear that all virtual asset businesses serving Canadian clients must be fully compliant, regardless of location.

Step 3: Implement Monitoring Without Overkill

Crypto MSBs are expected to implement transaction monitoring systems that go beyond basic address lists. The monitoring program must:

• Flag unusual or suspicious behaviors (e.g., large structured transactions, abnormal timing, high-risk jurisdictions)

• Detect patterns suggesting money laundering, sanctions evasion, or mixer usage

• Apply thresholds for large transactions, wallet clustering, or velocity spikes

• Integrate off-chain data with user behavior and onboarding risk level

• Generate and retain reports for potential STR (Suspicious Transaction Report) filings

• Maintain audit trails for all alerts, flags, and risk decisions

You do not need to build custom blockchain analytics software—but you must have a monitoring program that covers your core risk vectors and is justifiable during an audit.

Step 4: Manage Risk Intelligently

Compliance is not just about avoiding enforcement—it's about knowing your risk exposure and containing it. Crypto MSBs in Canada are expected to:

• Score and monitor customers (KYC-based and behavioral)

• Understand token-specific risks (e.g., mixer compatibility, anonymity-enhancing features)

• Identify new wallet addresses and patterns tied to illicit activity

• Segment user types: retail, business, institutional, offshore

• Perform Enhanced Due Diligence (EDD) for high-risk customers, transactions, or tokens

If you list new tokens or expand into new corridors, consider a Token Due Diligence review to ensure you don’t unknowingly expose your platform to sanctioned entities, DeFi exploits, or criminal clusters.

Step 5: Avoid Common Mistakes Crypto MSBs Make

Many crypto MSBs get registered, launch operations, and later face serious scrutiny due to:

• Recycled or generic AML policies with no virtual currency sections

• Failure to define source-of-funds validation procedures

• No transaction thresholds, behavioral triggers, or post-onboarding checks

• Lack of governance over wallet creation, custody processes, or liquidity routing

• Ignoring regulatory expectations for staff training and internal effectiveness reviews

• Poor recordkeeping around compliance reviews and STR decisions

Even if you’re small and just getting started, FINTRAC expects you to scale responsibly and prepare for audits from Day 1.

Compliance Tools and Localization

To reduce onboarding friction and meet regulator expectations:

• Use KYC providers accepted in both Canada and the U.S., 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 if you operate cross-border

Bonus: Want Banking? Get Compliant First

Gaining access to banking in Canada or the U.S. is significantly easier for crypto MSBs with a documented compliance program and real-time monitoring framework in place.
Regulatory Remediation services can improve your onboarding success with MSB-friendly institutions.

AMLI as a Partner for Crypto MSBs

AML Incubator is a trusted partner for crypto-native businesses building for scale and longevity. We offer:

• End-to-end MSB Registration

• CAMLO/MLRO Services for operational oversight

• EDD Services and monitoring program build-outs

• Regulatory Remediation for crypto companies under review or seeking banking access

• Token Due Diligence for risk classification and policy alignment

Whether you're launching, pivoting, or scaling your crypto MSB, we’ll help you stay compliant—and ready.

Final Thoughts

Registering and operating as a crypto MSB in Canada requires more than checking boxes. It demands a real, thoughtful approach to compliance—one that aligns with your tech stack, user experience, and risk appetite.

Get it right from the start, and you'll be more likely to secure partners, pass audits, and scale across borders.

Your Trusted Partner in Regulatory Excellence.