Copyright 2010, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Financial Services, December 2010

On December 10, 2010, the Quebec National Assembly adopted Bill 128, which enacts the Money-Services Businesses Act (the Act), among other legislative measures. As indicated in our November 2010 Blakes Bulletin on Financial Services summarizing the principal aspects of this legislation ( Quebec Proposes Licensing Regime for Money-Services Businesses), the Act introduces a licensing regime under the authority of the Autorité des marchés financiers (AMF) that will apply to the following money-services businesses:

  • currency exchange;
  • funds transfer;
  • the issue or redemption of traveller's cheques, money orders or bank drafts;
  • cheque cashing; and
  • the operation of automated teller machines (ATMs), including the leasing of a commercial space intended as a location for an automated teller machine if the lessor is responsible for keeping the machine supplied with cash.

Quebec is the first province to adopt legislation to regulate the money-services industry and the Act is being touted as an important part of the Quebec government's offensive against money laundering and tax evasion schemes. Adoption of Bill 128 was therefore a priority for the government, with the legislative process from the introduction of Bill 128 until its adoption remarkably lasting just one month, including specific consultations and detailed study of the proposed legislation by the National Assembly's Committee on Public Finance.

Various amendments to Bill 128 were adopted during the course of detailed study, including the following aspects, which should be of particular interest for money-services businesses that are not based in Quebec but offer services to Quebec residents:

  • The requirement to designate a director, officer or partner domiciled in Quebec or who has a place of business or place of work in Quebec, as a respondent for the purposes of the Act (the person that files the licence application and serves as the contact for AMF purposes), has been amended to allow money-services businesses that are not constituted under the laws of Quebec and that do not have their head office or an establishment in the province, to appoint a respondent in Quebec who is not a director, officer or partner of the business, but who otherwise meets the applicable age, legal capacity and domicile requirements under the Act and other conditions to be set by regulation, provided the person can properly exercise a respondent's functions with the AMF.

These money-services businesses will be required to give the appointed person access to the information and documents necessary to exercise his or her functions.

  • The requirement to provide, as part of the licence application process, information regarding employees of mandataries or agents whose functions are related to the money services offered on behalf of a moneyservices business, and the related suitability conditions that would apply to such employees, has been reduced to simply requiring information regarding each of the officers of a money-services business' mandataries or agents who are responsible for the money services offered, with associated suitability conditions applying to such officers.
  • The requirement to keep records and registers under the Act in an establishment in Quebec has been amended, for money-services businesses that do not have a head office in Quebec, to allow these records and registers to be kept outside Quebec, provided the information they contain is available for inspection, in an appropriate medium, in an establishment of the money-services business in Quebec or in any other place designated by the AMF. These money-services businesses must provide the technical assistance to facilitate inspection of the information.

The Act is set to enter into force on a date or dates to be set by the Quebec government and moneyservices businesses will be required to file an application with the AMF for a licence of the appropriate class within six months after the requirement to be licensed under the Act comes into force. Money-services businesses will want to monitor for the development of any implementing regulations, which may affect specific requirements under the Act, as well as for any announcements with respect to the Act's entry into force.

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