With RPAA deadlines and timelines looming, most money service businesses (MSBs) must prepare to register their businesses with the Bank of Canada as soon as possible. However, you might wonder whether your MSB needs to get registered under the Retail Payment Protection Act (RPAA).
The Renno & Co’s Fintech team has created a comprehensive guide to help you understand who needs a Bank of Canada registration under the RPAA and who doesn’t. For detailed information, keep reading our guide.
MSBs That Require Bank of Canada Registration under the RPAA
For the most part (with some limited exceptions), Canadian companies providing payment services will need to register under the RPAA. As such, the following business models are likely captured:
- Payment Service Providers
- Account Providers (e.g., if you’re holding client funds)
- Remittance Companies
- Multi-Currency Account Providers
- Payment Gateway Providers
- Merchant Account Providers
If your business model falls within this category, you must register under the RPAA.
MSBs That Don’t Require Bank of Canada Registration
The following MSB business models may not trigger Bank of Canada registration requirements:
- ATM-type businesses (including crypto ATMs)
- Brick-and-mortar currency exchange
- Non-custodial crypto exchange
- Custodial crypto exchange (although these companies will need to register with securities regulators)
However, please remember that even if one of the above is your primary product offering, adding a payment service as a small “add-on” to your existing product may still be captured under the RPAA.
For instance, if ExchangeCo operates a crypto exchange and adds a feature that allows users to pay their fiat bills using their crypto holdings with ExchangeCo, this “add-on” may require ExchangeCo to register its business with the Bank of Canada.
Penalties for Non-Compliance of MSB Registration in Canada
If you fail to register by the deadline set by the Bank of Canada, you may have to pay fines that start from $1 million.
Also, MSBs that have failed to register as PSPs with the Bank of Canada will be prohibited from performing any payment functions until they complete their registration. According to the Bank of Canada, there may even be operational halts imposed on these “late-to-register” MSBs for up to two months.
Banking and liquidity providers for your MSB may not tolerate your MSB falling out of compliance and decide to stop serving your MSB completely as a result.
Non-compliance can result in a series of negative implications for your business, from de-banking, to 60-day operational freezes and heavy fines. You can contact our compliance officers and lawyers to learn more.
How Renno & Co Can Help You with RPAA Registration
As a part of the RPAA registration, our compliance officers and lawyers help our clients throughout the process.
Here is what you can expect from our RPAA registration services:
Registration Strategy
We will develop a strategic plan to navigate the RPAA registration process effectively, ensuring all prerequisites and regulatory expectations are met prior to application submission.
Full Documentation Support
We will assist in preparing and organizing all necessary documentation as mandated by the RPAA, including business structure diagrams, operational scopes, and detailed profiles of key management personnel.
Regulatory Advice and Planning
We will offer ongoing regulatory advice throughout the engagement to ensure your business model aligns with RPAA requirements, and you are well-prepared to comply with your RPAA requirements.
Direct Representation with the Bank of Canada
We will act as your representative in all communications with the Bank of Canada, managing the submission of your registration application and ensuring effective dialogue throughout the process.
Application Submission
We will gather the required information from you and ensure that your application is properly submitted to the Bank of Canada within the prescribed registration window.
Regulatory Query Assistance
Assist with handling and responding to follow-up questions from the Bank of Canada regarding your RPAA registration application. This service focuses on clarifying and resolving specific inquiries to ensure all compliance concerns are addressed promptly and accurately.
Risk Management Framework Guidance
We will provide introductory guidance on the RPAA's requirements for having a written framework covering risk management and incident response. We will consult you on the essential elements needed in a compliant plan, equipping you with the foundational knowledge to prepare your written risk frameworks. Under the Premium package, we will prepare your written frameworks ourselves!
Risk Management Framework Development
We will craft a detailed and comprehensive written risk management and incident response framework that specifically addresses the unique risks associated with your business model and operational specifics under the RPAA.
Contact Renno & Co. Fintech Today to Meet All RPAA Registration Requirements and Stay Compliant!
While general guidelines on RPAA registration exist, the practical landscape is much more complex. If you are still confused about whether your MSB requires RPAA registration or not, you can connect with our team for a definitive plan forward.
At Renno & Co. Fintech, we help Canadian and foreign businesses seamlessly set up Fintech businesses in Canada in a legal and compliant fashion. Schedule a free consultation with our team today.
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