Starting November 2024, any business that is considered a Payment Services Provider (a PSP) will have to register with the Bank of Canada. This change comes as a result of the Retail Payment Activities Act – or simply, RPAA. The new RPAA Regulation aims to increase operational transparency, prevent financial fraud, and strengthen the Canadian fintech market in alignment with international standards.
Importantly, this is not a replacement for the MSB registration. Instead, for most MSBs this will be an additional registration that will be required. Registration with FINTRAC as an MSB is to ensure compliance with anti-money laundering and counter-terrorist financing regulations only. Registration with the Bank of Canada, on the other hand, encompasses a wider range of compliance regulations, and focuses more on managing the business’ operational risks and protecting end users.
Who is a PSP?
You are considered a PSP if you provide at least one of the following services:
- Maintaining an account for the end user
- Holding funds for the end user
- Initiating an electronic funds transfer at the request of an end user
- Authorizing of an electronic funds transfer
- Providing of clearing or settlement services
You will need to register with the Bank of Canada under RPAA if you:
- Are a PSP (see above for detailed description of who is a PSP)
- Perform payment functions related to an electronic funds transfer made either in Canadian or foreign currencies
- Have a place of business in Canada or perform payment activities for end users in Canada (even if your place of business is located outside Canada)
- Are not one of the exempt entities
Regulatory body
The Bank of Canada is Canada’s central bank, responsible for promoting the stability and efficiency of the country's financial system. As a regulator of payment service providers (PSPs) under the Retail Payment Activities Act (RPAA), the Bank of Canada oversees entities that perform payment functions, ensuring they meet standards for operational risk management, end-user fund safeguarding, and compliance with anti-money laundering and counter-terrorism financing laws. The Bank's role involves monitoring PSPs to prevent systemic risks and protect consumers, fostering a secure and trustworthy environment for financial transactions across Canada.
Registration Process:
Key Compliance Obligations Under RPAA:
Register with the Bank of Canada (BOC)
Implement a comprehensive risk management framework
Safeguard end-user funds to protect against losses
Report significant incidents affecting their services
