Currency exchange and funds transfer businesses not otherwise regulated would be covered
On November 10, 2010, there was a first reading by Quebec's National Assembly of Bill 128, An Act to enact the Money-Services Businesses Act and to amend various legislative provisions mainly concerning special funds and the financial sector (Bill 128).
If adopted, Bill 128 would result in the enactment of the Money-Services Businesses Act (the MSB Act). The Québec government has stated that the oversight of money-services businesses is part of a broad offensive against tax evasion and money laundering. The MSB Act would require that persons operating a "money-services business" for compensation obtain a license from Quebec's financial markets authority, the Autorité des marchés financiers (the AMF), and disclose information about their directors, officers, partners, shareholders, branch managers, employees working in Quebec and certain types of lenders they deal with. The term "money-services business" is not defined but the MSB Act would define "money services" to include currency exchange, funds transfer, the issue or redemption of travelers' cheques, money orders or bank drafts, cheque cashing, or operating automated teller machines. If the lessor of a commercial space is responsible for keeping an automated teller machine supplied with cash, the lessor would also be subject to the licensing provisions of the MSB Act.
Persons or entities that operate a money-services business on the date the MSB Act comes into force would have six months from that date to apply for a license under the MSB Act. They could continue to operate their money-services business until the AMF renders a decision on the license application. All license applications, together with the payment of prescribed fees, would need to be filed on behalf of the money-services business by a director, officer or partner that is either domiciled in Quebec or that has a place of business or a place of work in Quebec.
Persons or entities offering money services as part of their activities that are already governed by certain other specified legislation would not, however, be subject to the requirements of the MSB Act. This would be the case for activities governed by the Act respecting insurance (Quebec), the Act respecting financial services cooperatives (Quebec), the Derivatives Act (Quebec), the Act respecting trust companies and savings companies (Quebec), the Securities Act (Quebec)(except persons or entities who are subject to that Act only as reporting issuers), the Bank Act (Canada), the Cooperative Credit Associations Act (Canada), the Canadian Payments Act (Canada) or the Payment Clearing and Settlement Act (Canada). The MSB Act would not apply to the Gouvernement du Québec, nor any other government in Canada, municipality or metropolitan community, nor to a department or agency of any of the foregoing.
The MSB Act confers the responsibility of its administration and enforcement to the AMF. It also gives police forces certain powers, including, in the case of the Sûreté du Québec, the power to issue security clearance reports. The Sûreté du Québec and local municipal polices forces would be mandated to prepare a security clearance report with respect to any applicant under the MSB Act, as well as its directors, officers, partners, shareholders, branch managers, employees working in Quebec and certain types of lenders they deal with. These reports would essentially consist of criminal background checks on the key figures in the money-services business and would be intended to provide the AMF with information for the purposes of its decision to issue or deny a license to the applicant. The Sûreté du Québec or a police force could object to the issue of a license or could request that a license be suspended or revoked, and the AMF could refuse to issue a license if the requirements of the MSB Act are not met and, in particular, if the applicant is not of good moral character.
The MSB Act would also require that a money-services business, other than with respect to the operation of automated teller machines, verify the identity of its customers (in the manner to be prescribed by regulations to be adopted under the MSB Act), as well as maintain and update certain prescribed records and registers. A money services business would also be required to verify the identity of its other co-contracting parties as part of its business dealings.
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