Synopsis
British Columbia's Money Services Business Act is set to take effect, requiring money services businesses (MSBs) to report their business activities to the B.C. Financial Services Authority.
The act aims to reduce money laundering and terrorist financing and protect people from working with unregistered or criminally linked businesses.
MSBs must obtain a license from the provincial government and implement anti-money laundering and counter-terrorist financing measures. Failure to comply with the act's requirements may result in fines or other administrative monetary penalties.
This article reviews who will be affected by the new law and the key features of the act MSBs need to be aware of.
In a move by the B.C. government on March 29, 2023, money services businesses (MSBs) will soon be regulated and required to report their business activities to the B.C. Financial Services Authority (BCFSA). The BCFSA currently serves as the province's regulator of certain financial institutions.
While legislation has not yet been officially announced, it's expected to be released soon.
Having received Royal Assent on May 11, 2023, Bill 19, the Money Services Business Act (MSBA), will see MSBs subject to further oversight and may be subject to fines or other administrative monetary penalties for failure to comply with the act's requirements.
The act is a result of recommendations from the 2022 final report of the Cullen Commission which was an inquiry into money laundering in B.C. The report references Quebec's MSBA which has been in place since 2010 and has many of the same requirements as B.C.'s new act.
The goal of B.C's MSBA, which applies to MSBs operating or planning to operate in the province of B.C. is to reduce money laundering and terrorist financing and protect people from working with unregistered or criminally linked businesses.
What constitutes a money services business?
The MSBA states that entities engaged in the following activities are to be regarded as MSBs:
- Foreign exchange dealings
- Remitting funds or transmitting funds by any means or through any person, entity, or electronic transfer network
- Issuing or redeeming money orders, traveler's cheques, or other negotiable instruments, other than cheques payable to a named person, and
- Services included by regulation
The act currently excludes any regulated financial institution such as banks, credit unions, trusts, insurance companies, or any other organization already regulated by one of the provincial regulators of the Office of the Superintendent of Financial Institutions (OSFI).
As defined in the act, these MSB activities can be carried out by:
- An individual
- A corporation, a partnership, trust, or fund
- An association, syndicate, organization, or other organized group of people, and
- An individual or other person in that person's capacity as a trustee, executor, administrator or personal or other legal representative
Key features of the MSBA
While it's yet to be known precisely how regulations will apply, here are some key takeaways from the act that current or prospective MSBs may wish to understand:
- Licensing requirement: MSBs operating in or planning to operate in B.C. must obtain a license from the provincial government. The licensing process involves an application, which must include information about the business, owner(s), and key personnel — along with demonstrated compliance with various regulatory requirements.
- Regulated activities: The MSBA applies to a range of financial activities including money transmission, currency exchange, cheque cashing, and issuing or redeeming money orders or traveller's cheques.
- Compliance obligations: MSBs licensed under the MSBA are subject to various compliance obligations including implementing anti-money laundering and counter-terrorist financing measures. This may involve implementing customer due diligence procedures, reporting certain transactions to regulatory authorities, and maintaining records of transactions and customer information.
- Reporting requirements: MSBs are typically required to report suspicious transactions to the appropriate regulatory authorities. This helps to identify and prevent money laundering and other illicit or criminal activities.
- Enforcement and penalties: C's MSBA will provide for enforcement measures and penalties for non-compliance. Regulatory authorities may conduct inspections and investigations to ensure compliance with the law, and penalties may include fines, license revocation, or other sanctions.
- Regulatory authority: In B.C., the Financial Institutions Commission is responsible for administering and enforcing the MSBA. The commission oversees the licensing process, conducts examinations and inspections of licensed MSBs, and takes enforcement action against non-compliant businesses.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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