Nikita Veremeev
12.12.2025 | 6 min read
Updated: 12.12.2025
According to international regulators’ estimates, the global market for payments and digital financial services already accounts for trillions in turnover, and the share of transactions through Money Services Business (MSB) structures is growing at double-digit rates annually. At the same time, requirements for AML/KYC, reporting on suspicious transactions and transparency of business owners are being tightened. A mistake at the stage of choosing a jurisdiction for an MSB license becomes not just extra costs, but a systemic constraint on scaling, attracting investors and integrating with banks and payment providers.
I often ask clients the same question: do you want to “get the paper” or to build an international financial service that lives 5–10 years and is resilient to regulator and bank checks? The answer determines which country to consider: MSB Canada, MSB USA or MSB UK. In this article I will analyze how to choose a jurisdiction for an MSB with a focus on Canada, the USA and the United Kingdom, and will show the strategic consequences of each decision.
If you are planning to launch international payment services, crypto functionality, crowdfunding platforms or processing for clients from Europe, Asia and the CIS – I recommend reading the text to the end. I will take you from understanding the essence of licensing financial activities to practical steps for obtaining a license and reducing operational risks, drawing on the experience of projects that the COREDO team has been implementing since 2016.
MSB License and Choosing a Jurisdiction: What Matters?
The MSB (Money Service Business) license is a mandatory authorization for companies providing money transfer, currency exchange and other financial services. However, obtaining this license and its requirements vary significantly depending on the country or jurisdiction where you plan to operate, since each country sets its own regulatory standards and the set of permitted services.
The right choice of jurisdiction directly affects the complexity of the licensing process, the range of available services and the speed of market entry.
Definition and Functions of an MSB License
Money Services Business (MSB): this is not just a «money transfer permit». In different jurisdictions, MSB covers:
- currency exchange and transfers;
- issuance and redemption of electronic money;
- international payment operations;
- payment processing services and safeguarding client funds;
- certain models of dealing with digital currencies and crypto‑fiat exchange.
financial license MSB secures the company’s right to provide these services in a specific country and falls under the international regulation of payment systems and AML standards.
In COREDO projects we always start with a strict description of the business model: where the money flows, who the customer is, which markets you want to cover over the next 3–5 years. This determines the set of services, the type of license and the regulator you’ll have to work with.
A client who plans only payment processing and safeguarding of client funds for e‑commerce faces a different set of requirements than a fintech platform with P2P transfers and cryptocurrency functionality.
The Impact of Jurisdiction on Legality and Operations
A jurisdiction determines not only the legality of operations, but also:
- access to legal protection of international payments;
- banks’ attitude toward your business;
- the possibility of cross‑border scaling;
- the cost of compliance and operational risks in different jurisdictions.
In one of COREDO’s recent assignments we compared three scenarios for a client: MSB Canada, registration in the USA and entry through MSB UK with subsequent operations in Europe and Asia. Formally, all options allowed working with international transfers, but the long‑term consequences of the license choice differed radically.
For example, choosing a country with softer capital requirements allowed savings at the start, but increased the likelihood of having to revise the business model in 2–3 years due to regulatory changes and pressure from banks.
Ultimately the client settled on a combined structure: a license in Canada as the base platform and subsequent company registration for MSB in Europe with a local license tailored to a specific region.
The Role of AML and KYC in MSB Licensing
AML (Anti‑Money Laundering) and KYC (Know Your Customer) are not a «formality for the regulator». They are the core of any MSB license. Regulators in Canada, the USA and the United Kingdom require:
- the development and implementation of internal control policies and transaction monitoring;
- procedures for identifying clients and beneficiaries;
- reporting systems for suspicious transactions and international transfers;
- the appointment of responsible persons (AML officer, compliance officer), in some cases: country residents.
COREDO’s practice confirms: it is precisely the AML requirements for MSB that become the point at which projects either successfully pass Licensing or receive requests, delays and additional checks.
The earlier a team begins to build real KYC/AML processes, rather than «documents for the application», the faster the MSB license acquisition process goes and the easier it is to open bank accounts.
Comparison of MSB licensing requirements in Canada, the USA and the UK
Comparing MSB licensing requirements and conditions in Canada, the USA and the UK is important for those planning to provide monetary services across jurisdictions and who want to understand how regulators, procedures and compliance burden vary from country to country. Below we will examine how the MSB license in Canada differs, and then compare it with the approaches in the USA and the UK.
MSB license in Canada
In Canada the key regulator is FINTRAC. It maintains the MSB registry and oversees compliance with the PCMLTFA (the law on anti‑money laundering and counter‑terrorist financing). For international fintech projects, MSB Canada often becomes a starting point.
Key features:
- Regulator and registration process. Registration is conducted online, the company is entered into FINTRAC’s registry, a detailed description of the business model, AML policies/KYC, information about beneficiaries and key persons are submitted. The COREDO team supports clients from the stage of registering a legal entity in the jurisdiction to responding to FINTRAC inquiries.
- Local MSB presence requirements. In some models it is allowed to operate without a full physical office; a virtual office for an MSB in Canada is possible. This reduces startup costs, especially for entrepreneurs from Europe and Asia.
- Minimum authorized capital. There are no formal capital requirements for basic MSB registration, which makes entry relatively accessible. Still, banks and partners assess real financial stability.
- AML/KYC and the role of an AML agent. The PCMLTFA and FINTRAC’s subordinate acts impose strict requirements for transaction monitoring, staff training, recording and data storage. We often help appoint and train a local AML agent to ensure compliance with requirements of FINTRAC and reduce the risk of fines.
- Timeframe for obtaining an MSB license in Canada. With proper document preparation, registration in the registry usually takes a few months. Complex structures involving cryptocurrency transactions require additional justification.
- Benefits for international business. The advantages of an MSB license in Canada for international business lie in the combination of flexibility, relatively moderate cost and good reputation. Companies with a Canadian license successfully enter European and Asian markets, building partnerships with payment systems and crowdfunding platforms.
- MSB vs FMSB. For non‑resident companies it is important to distinguish between MSB and FMSB (Foreign MSB). The FMSB license is intended for foreign providers that offer services to clients in Canada without physical presence. At COREDO we often compare for clients how to choose between an MSB and an FMSB license in Canada taking into account business structure and plans for local representation.
- Cryptocurrencies and the RPAA. A separate block: regulation of digital currencies and crypto transactions. RPAA (Retail Payment Activities Act) requirements are gradually strengthening oversight of payment systems. This affects fintech projects that combine classic transfers and crypto functionality, and requires a well‑thought‑out compliance model.
COREDO’s experience shows: with competent legal support for an MSB license, a Canadian license becomes a convenient base for further business scaling and expansion into other regions.
MSB license in the USA
In the USA the concept of an MSB is regulated at two levels:
- federal: through FinCEN and the Bank Secrecy Act (BSA);
- state level: each state may introduce its own licenses and requirements.
Key points:
- Federal registration through FinCEN. Any company falling under the MSB definition must register with FinCEN and comply with the BSA requirements: develop a compliance program, appoint a responsible person, keep records and file SAR/CTR reports on suspicious and large transactions.
- Differences between federal and state MSB regulation in the USA. In some states separate money transmission licensing is required, and states establish their own capital and personnel requirements, reporting and local presence rules. This increases project cost and complexity.
- registration specifics for MSB in Montana. The state of Montana does not require a separate money transmission license, which makes MSB registration in Montana attractive from a cost perspective. At COREDO we have worked out structures for clients where Montana was used as a starting point with subsequent expansion, while paying special attention to compliance with federal requirements and proper positioning before banks.
- Local personnel and presence requirements. In most models local representation and employees in the USA are required. This affects the budget but increases trust from regulators and banks.
- Difficulties and how to overcome them. The main difficulties in obtaining an MSB license in the USA are related to:
- the combination of federal and state requirements;
- high expectations regarding the level of AML/KYC systems;
- the conservative approach of banks to opening accounts for MSBs.
Legal support for AML and licensing and well‑established internal control processes are critical here.
- Cryptocurrency operations. licensing specifics for MSB for digital currencies in the USA include requirements for crypto exchanges and exchangers. In some states separate crypto licenses are in force, and FinCEN treats them as MSBs with additional obligations.
The American jurisdiction provides a high level of trust from international partners, but requires significant investments in compliance and risk management.
For many COREDO clients, the USA becomes the second step after refining the business model in a more flexible jurisdiction.
MSB licence in the UK
In the UK, MSB regulation is the responsibility of:
- FCA (Financial Conduct Authority);
- PRA (Bank of England) – for certain models related to payment institutions and custody of funds.
Key elements:
- Regulators and the licensing process. The process is lengthy and detailed, often taking up to 12 months. The FCA analyzes the business model, funding sources, directors’ competencies, the risk management system and financial oversight and compliance.
- Personnel and office requirements. For a company with an MSB in the UK, having a real physical office and qualified local staff is critical. Regulations place high expectations on management experience and the internal control system.
- AML/KYC and reporting. UK regulators require advanced KYC procedures, transaction monitoring, regular reporting and, where necessary, independent audits. For a number of COREDO clients, the team built a comprehensive system based on modern AML platforms integrated into the company’s core system.
- Cost and timing of licensing. The cost of an MSB license in the UK and related expenses for compliance, staff and office are higher than in Canada and in most scenarios in the USA. At the same time, a UK license significantly increases confidence among international banks and investors.
- Tax and operational aspects. Tax aspects of an MSB in different jurisdictions often favor the UK if a company plans to accumulate profits in a stable and predictable legal environment. For some COREDO clients, this becomes a key argument in favor of London as a headquarters.
- Digital currencies and fintech. Features of MSB licensing for digital currencies in the UK include separate registration of crypto providers and stricter transaction control requirements. This complicates the launch but provides a high level of legitimacy.
Criteria for choosing a jurisdiction for an MSB license
The key criteria for choosing a jurisdiction for an MSB license directly determine not only the startup costs but also the level of regulatory burden, access to target markets and the resilience of the business model. Understanding how legislative and regulatory requirements are structured in different countries helps to pre-assess risks, compliance requirements and the scale of available opportunities.
Legislative requirements and regulations
When someone asks me “how to choose a jurisdiction for obtaining an MSB license between Canada, the USA and the United Kingdom”, I start with a map of regulatory requirements:
- the depth and detail of AML requirements for MSBs;
- RPAA requirements in Canada and the BSA in the USA;
- reporting obligations for international transfers and suspicious transactions;
- requirements for internal control systems and transaction monitoring.
In practice COREDO uses a risk‑based approach: we assess the business risk profile, client countries, transaction types and select a jurisdiction where regulatory requirements are commensurate with that profile. An overly liberal regime creates problems when working with banks and partners; an overly strict one makes the launch unreasonably expensive.
Operational and financial factors
Second block: operational and financial parameters:
- timelines and cost of MSB licensing in each country;
- requirements for a local office, local staff and representation;
- requirements for bank accounts for MSBs and the real practice of opening them;
- presence or absence of minimum statutory capital requirements.
COREDO’s experience shows that comparing timelines and costs of obtaining an MSB license in Canada, the USA and the UK in isolation from the operational model always leads to wrong decisions. For businesses with limited budgets and ambitions for a quick international market entry, Canada often offers the best balance. For projects focused on institutional clients and investors, the higher cost of a license in the United Kingdom is justified.
Tax planning and legal support
The third layer: taxes and legal risks:
- tax aspects of MSBs in different jurisdictions;
- possible tax incentives for international structuring;
- shareholder protection and legal safeguards for international payments;
- presence of bilateral agreements to avoid double taxation.
A solution developed by COREDO for one fintech client included a Canadian MSB license, a European holding company and an Asian operating unit. This combination allowed optimizing the tax burden, securing access to European investors and at the same time simplifying AML oversight for clients from Asia.
Scaling and international cooperation
Finally, the key question: how the chosen jurisdiction affects:
- scaling of financial services;
- integration with international payment systems;
- international cooperation and investment;
- long-term sustainability and ROI when choosing a jurisdiction.
A Canadian MSB license, with the right architecture, enables relatively quick expansion into European and Asian markets. The U.S. license opens doors to the largest payments market but increases risk management requirements. The U.K. license enhances your standing with banks and funds, especially if you plan funding rounds and to target institutional investors.
Practical recommendations for the MSB license
Practical recommendations for choosing and obtaining an MSB license will help you not only determine the appropriate jurisdiction and business model, but also anticipate regulators’ requirements, timelines, and launch costs. At the preparation and submission stage it is important to build a consistent action plan to minimize the risk of refusal and speed up obtaining the MSB license.
Preparation and submission of documents
At the preparatory stage it is important to:
- properly register the legal entity in the jurisdiction;
- collect a set of documents on beneficiaries, directors, and sources of funds;
- describe business processes and the money flow chain, and use clear terminology for the regulator.
For Canada you’ll need the documents required to apply for an MSB license: incorporation documents, AML/KYC policies, and a description of monitoring IT systems. In some cases COREDO designs IT architecture so that it meets the requirements of both FINTRAC and potential European regulators.
If a virtual office is used for an MSB in Canada, it is important to confirm its compliance with requirements for communication with the regulator and for document storage.
Organization of local representation and personnel
Regulators pay close attention to:
- the actual level of presence in the country;
- the qualifications of directors, compliance officers, AML agents and staff.
In Canadian projects the COREDO team helps formalize the role of an AML agent in a company holding an MSB license in Canada, and establish regular reporting and staff training. In the USA and UK, higher expectations are placed on personnel regarding experience and involvement in operational control.
Optimizing costs and licensing timelines
From the timing and budget perspective it is important to:
- take into account the processing times for an MSB license in Canada and the United Kingdom;
- plan expenses for lawyers, audits, and AML systems;
- take advantage of certain states, for example the specifics of MSB registration in Montana (USA), to minimize costs while remaining within federal regulation.
COREDO’s practice has shown that a well-considered combination of jurisdictions and distribution of functions among group companies makes it possible to reduce startup expenses without sacrificing licensing quality or access to banking services.
Post-licensing support and compliance
obtain a license – only half the journey. To maintain it you need:
- stable internal control processes and transaction monitoring;
- regular reporting of suspicious transactions to FINTRAC, FinCEN and the FCA;
- updating policies to reflect changes in legislation;
- implementing modern transaction monitoring and risk management technologies.
The COREDO team supports clients at the post-licensing stage: we conduct regular AML audits, update documentation, and prepare companies for regulator and bank inspections. This directly affects how an MSB license helps reduce operating costs and increase business profitability: the fewer unplanned inspections and blocks, the more stable the operational flow.
MSB Licensing in Canada, the USA and the United Kingdom: comparison of parameters
| Parameter | Canada (FINTRAC) | USA (FinCEN) | United Kingdom (FCA/PRA) |
|---|---|---|---|
| Regulator | FINTRAC | FinCEN + state licenses | FCA, PRA if required |
| Registration process | Online, typically 2-5 months | Federal registration 3-6 months + state registrations | Up to 12 months |
| Local office requirements | Virtual office possible | Local presence required (depends on state) | Physical office and staff required |
| Minimum capital | Not formally set | Depends on the state | Required and depends on the model |
| AML/KYC requirements | Strict — PCMLTFA, RPAA requirements | Strict — BSA, SAR/CTR | Strict — FCA regulations, audits |
| License cost | Medium | Medium/high | High |
| Cryptocurrency regulatory specifics | Operations permitted, strict AML oversight | Additional requirements, separate state licenses | Strict control, separate crypto licensing |
| Scalability | High for international services | High, especially within the USA | Medium/high for Europe and institutions |
Key findings and steps for entrepreneurs and executives
Summarizing COREDO’s experience with projects in Canada, the USA and the United Kingdom, I would formulate the choice like this:
- Canada, the optimal balance of flexibility, cost and reputation for international fintech projects, especially at the launch stage and business model validation.
- USA, a logical step for companies targeting the largest consumer market and prepared to invest in complex multi-layered compliance.
- UK, a prestigious and strict jurisdiction that strengthens trust from banks and investors, suitable for mature projects and structures with a clear long-term strategy.
Practical steps I recommend to start with:
- Honestly describe the business model, client geography and projected transaction volumes.
- Assess key risks and AML/KYC requirements, including by client countries.
- Compare not only the MSB license cost, but also the total operating expenses and staffing requirements.
- Consider the long-term consequences of the MSB jurisdiction choice for the company’s financial resilience and scenarios for scaling into Europe and Asia.
- Budget for post-license support: regular AML audits, policy updates, and team training.
My experience shows: those who initially view licensing not as a «one-off project», but as the foundation of a managed and protected international business ultimately win on ROI, cost of capital and resilience to crises. If you are deciding between MSB Canada, MSB USA and MSB UK, it’s sensible to discuss the structure architecture and the licensing pathway before filing the first application — this is usually where collaboration with COREDO begins.