FINTRAC & Banking Expectations for MSBs: Do You Need a Physical Presence in Canada?
You may not need a Canadian office to register your MSB with FINTRAC—but banks don’t always agree. Before you launch, here’s what you need to know to avoid rejections, delays, or blocked accounts.

Why Canadian MSBs Ask About Physical Presence Requirements
Many fintech founders and global businesses looking to enter the Canadian financial services space face the same question early on:
"Does my company need a physical office, employee, or entity in Canada to qualify for MSB registration and banking?"
It’s a critical issue. The answer impacts:
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Your eligibility to register as a Money Services Business (MSB) under FINTRAC
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Your ability to open Canadian bank accounts or payment processing relationships
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Your tax and compliance obligations, particularly for foreign-controlled firms
The reality is that FINTRAC and banks apply different standards; and failing to understand the distinction can delay your launch or get your application denied.
What FINTRAC Requires for MSB Registration
Do You Need a Canadian Entity to Register with FINTRAC?
No. FINTRAC does not require a Canadian-incorporated company to register as an MSB. Foreign companies can register as foreign MSBs and operate in Canada, provided they meet all regulatory expectations.
However, these companies are still subject to all Canadian compliance requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), including:
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Appointing a Compliance Officer or CAMLO
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Developing a full written compliance program
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Providing adequate AML/ATF training for management and staff
- Conducting regular risk assessments
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Conducting Know Your Client (KYC) procedures
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Maintaining detailed records
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Filing mandatory reports (e.g. STRs, LCTR, LVCTR)
Get a free consultation by booking a call with AML Incubator. Let's Talk and see how AMLI can help you be compliant.
FINTRAC’s primary concern is whether your company offers services to persons in Canada and handles transactions originating from or sent to Canada. If yes, and those services fall under MSB activities (e.g., foreign exchange, remittance, crypto transfers), registration is mandatory, even if you operate from abroad.
Do You Need an Office or Staff in Canada?
For registration purposes, FINTRAC does not mandate a physical office or local employees. However, you do need to:
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Maintain a Canadian mailing address for official correspondence
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Be reachable by FINTRAC during reviews or compliance examinations
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Ensure your compliance program accounts for Canadian-specific risks
Having no one in Canada may create practical challenges, especially if FINTRAC attempts to conduct an audit or contact your CAMLO.
What Canadian Banks Expect from MSBs
Do Banks Require a Physical Canadian Presence?
Yes—in most cases, banks will require your MSB to have a physical presence in Canada, even if FINTRAC does not.
This typically includes:
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Canadian-incorporated entity (federal or provincial)
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Resident directors or officers (depending on jurisdiction)
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Operational presence such as a compliance officer, accountant, or team member in Canada
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A physical or virtual office address
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Tax registration or evidence of regulatory status
Banks view foreign MSBs as higher-risk clients, particularly if the ownership, operations, and banking activity occur offshore. To reduce their exposure, many Tier 1 and Tier 2 financial institutions require a Canadian footprint before onboarding.
That being said, AML Incubator can help with banking threough its AMLI Banking services, where we take care of banking A to Z, significantly improving probability of successful onboarding. Alternatively, there are alternative solutions that we will discuss a little later.
Why Do Banks Have Stricter Requirements?
Canadian banks are subject to their own AML obligations under OSFI, the PCMLTFA, and risk-based expectations from international bodies like the Financial Action Task Force (FATF). Their onboarding criteria go beyond minimum registration thresholds.
A company with no Canadian management, no physical presence, and no local accountability is often perceived as too risky to bank, even if technically compliant with FINTRAC rules.
Banks ask:
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Who will respond if a transaction triggers a red flag?
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How will we conduct due diligence or audits if there’s no one in Canada?
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Is the company structured to avoid scrutiny or taxation?
These are valid concerns, especially for high-risk categories like crypto, FX, and remittance.
AML Lincubator's CAMLO/MLRO Services solve most of these problems by providing dedicated, expert compliance officers and analysts. And if something does go wrong, Regulatory Remediation services can make you and your company whole.
Can You Operate as a Foreign MSB Without Canadian Banking?
Yes—but it’s increasingly difficult.
Many foreign-registered MSBs operate by:
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Partnering with a Canadian sponsor or white-label service provider
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Holding funds in foreign accounts while servicing Canadian users
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Using cross-border payment networks or crypto rails to avoid needing Canadian banking
However, these models come with downsides:
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Limited trust from Canadian partners
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Increased scrutiny from regulators
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Restricted access to payment processors or acquirers
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Difficulty scaling or exiting
If your company has serious growth plans in Canada, securing local banking and full compliance alignment will be necessary at some stage. AML Incubator can help make this as smooth as it can possibly be. Just reach out for a free consultation.
What’s the Best Setup for FinTechs Expanding into Canada?
For most MSBs entering the Canadian market, the optimal path includes:
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Incorporating a Canadian entity
- Registering as an MSB under FINTRAC
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Appointing a qualified resident CAMLO with strong compliance credentials
- Maintining a solid written compliance program
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Completing a full AML effectiveness review
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Working with a compliance advisor to align your risk profile to banking expectations
Some companies attempt to delay entity formation or hiring, hoping to avoid cost or commitment until traction is proven. But this often results in rejected banking applications and delays with onboarding vendors, payment processors, or partners.
Being proactive shortens the path to market.
Final Thoughts
FINTRAC and Canadian banks apply different standards when it comes to physical presence. While FINTRAC allows foreign MSBs to register, most banks will not open accounts unless your company has a tangible Canadian footprint.
Understanding both sides is critical. You may technically qualify for registration, but without the right structure, you will likely struggle to access financial infrastructure.
AML Incubator helps Canadian and international MSBs navigate this gap. From registration and risk assessments to resident CAMLO support and audit-ready documentation, we build compliant, bankable structures that stand up to scrutiny.
To explore your options, start with MSB Registration or CAMLO Services, and we’ll help you chart the right path.