License – Netjump

Update of Payment Service Provider (PSP) registration under the Retail Payment Activities Act (RPAA)

alignti_admin — Thu, 13 Feb 2025 13:21:38 +0000

The Bank of Canada has just released a list of individuals and entities that have applied for payment service provider (PSP) registration under the Retail Payment Activities Act (RPAA). Bank of Canada is currently processing the applications of the individuals and entities on the list, hence, this list does not indicate any approvals from the Bank of Canada — those will be announced in September 2025. This list serves as a valuable resource for conducting due diligence during onboarding or ongoing monitoring of PSPs.

The RPAA includes a transition period for individuals and entities to submit their registration application. During this period, Bank of Canada will update the list regularly to publish the contact information provided by applicants in their respective applications.

All you need to know about Canada Retail Payment Activities Act (RPAA)

alignti_admin — Thu, 13 Feb 2025 13:11:45 +0000

The Canada Retail Payment Activities Act (RPAA) is legislation aimed at improving the security, oversight, and efficiency of retail payment systems in Canada. It will have a major impact on Canada’s financial sector by improving the security and dependability of payment systems. All payment service providers (PSPs), both local and international, will need to register with the Bank of Canada as the first step in meeting the new regulatory requirements.

It’s important to note that this is not a substitute for the MSB (Money Services Business) registration. For most MSBs, this will be an additional requirement. While FINTRAC handles MSB registration and oversees anti-money laundering (AML) and counter-terrorist financing (CTF) efforts, registering with the Bank of Canada is designed to ensure that PSPs have the necessary framework to manage operational risks and effectively respond to incidents. It regulates how retail payment activities are conducted by payment service providers (PSPs), with a focus on ensuring consumers and businesses are protected. Here are the key aspects:

Regulation of Payment Service Providers (PSPs): The Act defines and regulates entities involved in processing retail payments, such as mobile payment apps, payment gateways, and other third-party services.
Licensing and Oversight: Payment service providers must be registered with the Bank of Canada. The Act gives the Bank of Canada the authority to oversee these entities and monitor compliance with regulations.
Consumer Protection: The Act includes measures to ensure consumer protection in retail payment activities, such as transparency in terms of fees, terms of service, and dispute resolution mechanisms.
Security Requirements: PSPs are required to implement security measures to safeguard consumer data and funds from fraud, theft, or misuse.
Data Handling and Privacy: The Act includes guidelines for how payment-related data should be handled, ensuring privacy and protection of personal information.
Risk Management: The Act addresses the management of risks in payment systems, including financial stability and contingency plans in case of system failures.
Enforcement and Penalties: The Bank of Canada has the authority to enforce compliance with the Act and can impose penalties or sanctions on non-compliant PSPs.

In summary, the RPAA aims to enhance the safety, security, and transparency of retail payment activities, while ensuring effective regulation of the payment ecosystem in Canada.

Essential Record-Keeping and Reporting Requirements for Canadian MSBs/FMSBs

alignti_admin — Wed, 15 Jan 2025 02:00:55 +0000

Regulatory Compliance for MSBs and FMSBs in Canada: Essential Record-Keeping and Reporting Requirements

Money Services Businesses (MSBs) and Foreign Money Services Businesses (FMSBs) operating in Canada are subject to stringent regulations designed to combat financial crimes, including money laundering and terrorist financing.

A fundamental aspect of these regulations is maintaining accurate records and ensuring timely reporting. License holders must diligently document all transactions, store client information securely, and adhere to regulatory mandates.

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) oversees these compliance measures, ensuring that financial transactions remain transparent and legitimate. Below is an outline of the key record-keeping and reporting obligations that MSBs and FMSBs must fulfill.

Record-Keeping Requirements for MSBs and FMSBs

To maintain compliance, MSBs and FMSBs must adhere to the following record-keeping standards:

Customer Identification
Businesses must document essential details about their customers, including full name, address, date of birth, and occupation. This data helps verify identities and mitigate financial crime risks.
Business Relationship Records
Companies must maintain documentation of their relationships with customers, including how accounts are utilized. This assists in analyzing financial behaviors and assessing risk factors.
Written Compliance Program
A formal Anti-Money Laundering (AML) compliance program must be documented, detailing procedures such as transaction monitoring, customer due diligence, and reporting protocols.
Beneficial Ownership Records
Firms should maintain details on beneficial owners (individuals holding 25% or more of an entity), including names and addresses of directors, trustees, and stakeholders in corporations and trusts.
Third-Party Involvement
For transactions exceeding $10,000 in virtual currency, businesses must determine whether a third party is involved and document the details accordingly.
Politically Exposed Persons (PEPs) and International Organization Heads (HIOs)
If a client is classified as a PEP or HIO, their title, position, and source of funds must be recorded.
Transaction Records
Any transaction exceeding $1,000 must be documented, including date, amount, currency type, and parties involved, to aid in detecting suspicious activities.
Account Activity Records
Businesses must document all accounts created by customers and maintain records of associated transactions.
Employee Training Documentation
Records must be kept to verify that staff members receive proper AML and counter-terrorist financing (CTF) training.
Retention of Report Copies
Businesses must retain duplicate copies of reports submitted to FINTRAC, including those related to suspicious transactions, large cash transactions, and electronic funds transfers.

Retention Period: All records must be preserved for a minimum of five years.

Reporting Obligations for MSBs and FMSBs

MSBs and FMSBs must submit reports to FINTRAC to assist in detecting and preventing illicit financial activities. The key reporting requirements include:

Suspicious Transaction Reports (STRs)
Businesses must report transactions suspected of involving money laundering or terrorist financing.
- Submission Deadline: As soon as suspicion arises, without unnecessary delay.
Terrorist Property Reports (TPRs)
If a business identifies property owned or controlled by a terrorist entity, a report must be filed.
- Submission Deadline: Immediately upon identification, without undue delay.
Large Cash Transaction Reports (LCTRs)
Transactions involving cash amounts exceeding $10,000 CAD must be reported.
- Reporting Threshold: A single transaction over $10,000 CAD or multiple transactions totaling this amount within 24 hours.
- Submission Deadline: Within 15 calendar days of the transaction.
Large Virtual Currency Transaction Reports (LVCTRs)
Businesses must report virtual currency transactions over $10,000 CAD.
- Reporting Threshold: A single transaction above $10,000 CAD or multiple transactions totaling this amount within 24 hours.
- Submission Deadline: Within 5 calendar days of the transaction.
Electronic Funds Transfer Reports (EFTRs)
International transactions exceeding $10,000 CAD require reporting.
- Reporting Threshold: A single cross-border transfer over $10,000 CAD or multiple transfers meeting this threshold within 24 hours.
- Submission Deadline: Within 5 calendar days of the transaction.

Understanding the 24-Hour Rule

To enhance accuracy in reporting large transactions, businesses must aggregate multiple transactions of the same type if:

They total $10,000 CAD or more.
They occur within a consecutive 24-hour period.
They involve the same conductor, beneficiary, or third party.

By adhering to these stringent compliance measures, MSBs and FMSBs can ensure transparency and contribute to the fight against financial crimes in Canada.