MSB acquisition

ELI Canada

In the ever-evolving financial landscape, acquisitions are a common strategy for commerces looking to expand their reach and capabilities. For those considering an acquisition in Canada, especially in the realm of Money Services Businesses (MSBs), it’s essential to understand the regulatory environment and the unique considerations that come into play. This article explores the nuances of MSB acquisition in Canada, providing insights into the process and the regulatory framework.

Understanding MSBs

Money Services Businesses (MSBs) encompass a wide range of financial entities, involving money transmitters, currency exchanges, check cashers, and prepaid access providers. They play a vital role in facilitating financial transactions, often serving underbanked or underserved populations.

Regulatory Framework

MSBs in Canada are subject to a comprehensive regulatory framework designed to prevent money laundering, terrorist financing, and other illicit activities. The key regulatory authorities overseeing MSBs involve:

  • FINTRAC: Canada’s monetary intelligence unit responsible for collecting, analyzing, and disseminating financial intelligence. MSBs must register with FINTRAC and comply with strict reporting demands.
  • Provincial Regulators: In addition to federal oversight, MSBs may also be subject to provincial regulations. Each province in Canada has its regulatory authority responsible for licensing and supervising MSBs.

Key Considerations during Acquisition of MSB in Canada

If you’re considering acquiring an MSB in Canada, here are some essential considerations:

  • Due Diligence: Conduct thorough due diligence to assess the monetary health, conformity history, and reputation of the MSB you intend to acquire. This step is critical in evaluating the potential risks and profits of the acquisition.
  • Regulatory Conformity: Ensure that the target MSB is compliant with all federal and provincial regulations. This includes having robust anti-money laundering (AML) and know-your-customer (KYC) procedures in place. Non-compliance can lead to severe penalties and reputational damage.
  • Licenses and Permits: Verify that the MSB holds all the necessary licenses and permits to operate in Canada. Licensing requirements may vary by province, so it’s essential to understand the specific regulatory landscape in the region where the MSB operates.
  • Change of Control: In many cases, acquiring an MSB triggers a “change of control” event, requiring regulatory approval. You must notify the relevant regulatory authorities and obtain their consent before finalizing the acquisition. This process may involve submitting detailed information about the acquiring entity and its ownership structure.
  • AML/CFT Programs: Review and update the AML and counter-financing of terrorism (CFT) programs to reflect the new ownership structure. Ensure that these programs are robust and capable of identifying and mitigating risks associated with the MSB’s activities.
  • Customer Notification: In some cases, customers of the MSB may need to be informed of the change in ownership, and their consent may be required. Transparency and effective communication are essential to maintaining customer trust during the transition.
  • Inclusion and Transition: Plan the integration of the acquired MSB into your existing operations carefully. Smoothly transitioning customers, staff, and systems is crucial for business continuity. Develop a comprehensive integration strategy that addresses technology, operations, and personnel considerations.
  • Ongoing Compliance: After completing the acquisition, it’s essential to maintain ongoing conformity with all applicable regulations. This involves conducting regular AML audits, submitting required reports to FINTRAC and other relevant authorities, and staying informed about regulatory updates and changes.
  • Risk Assessment and Mitigation: Conducting a comprehensive risk assessment is a critical step in the acquisition process. This assessment should encompass various aspects, including regulatory, financial, operational, and reputational risks associated with the acquisition. Understanding the risks involved allows you to develop a well-informed risk mitigation strategy. This strategy should address identified vulnerabilities and outline steps to mitigate or manage these risks effectively.
  • Employee Integration: People are a vital asset in any acquisition. Ensure that the employees of the acquired MSB are integrated seamlessly into your organization. This may involve training programs, cultural integration efforts, and communication plans to keep staff informed and engaged during the transition.
  • Technology and Systems: Evaluate the technology and systems used by the MSB. Assess their compatibility with your existing infrastructure and identify any necessary upgrades or integrations. Cybersecurity is a critical consideration, as a breach can have severe legal and financial consequences.
  • Legal Counsel and Advisory Services: Engage experienced legal counsel and advisory services specializing in financial regulations and acquisitions. Their expertise can help you navigate the complex legal landscape, ensure conformity, and mitigate legal risks.


In conclusion, acquiring an MSB in Canada can be a strategic move for expanding your monetary services portfolio and reaching new markets. However, navigating the regulatory landscape is paramount to a successful acquisition. Understanding and complying with federal and provincial regulations, conducting thorough due diligence, and planning for a smooth transition are essential steps in ensuring a smooth and compliant acquisition process.

By following these guidelines and working closely with legal and regulatory experts, businesses can harness the potential of MSB acquisition in Canada while mitigating regulatory risks. Embracing the regulatory framework and prioritizing compliance not only ensures the integrity of monetary services but also fosters trust among customers and regulators alike, ultimately leading to long-term success in the Canadian market.

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