City of Richmond calls on government to expedite regulations for Money Services Businesses
04 August 2020
The City of Richmond is calling on the Provincial Government to act quickly and take responsibility for licensing and regulating Money Services Businesses across British Columbia in an effort to stamp out illegal money laundering.
Money Services Businesses, or MSBs, are entities engaged in the foreign exchange of funds or alternative money transfer systems that are outside of the operations of traditional financial institutions. Some jurisdictions define privately-owned automated teller machines (ATMs) as MSBs as well as businesses dealing in virtual currency such as Bitcoin.
At its meeting on July 27, Council raised concern that not enough is being done to limit illegal practices through MSBs and that swifter action is needed.
“We need a robust licensing and regulatory structure in British Columbia that has the authority and investigative tools to not just monitor and inspect Money Services Businesses, but to detect underground businesses that support illegal activity,” said Mayor Malcolm Brodie. “While we continue to implement strategies that make Richmond a safe and resilient community, the control and enforcement of MSBs is outside our mandate so we are calling on the Province to act and act now.”
MSBs are currently required to register with the Financial Transactions and Reporting Analysis Centre of Canada (FINTRAC), but concern has been raised that more enforcement and regulation is needed to stamp out those operating as fronts for illegal money laundering and activities.
A recent study on money laundering for the Provincial Government found that underground or undetected MSBs functioned like international banks, providing liquidity for organized crime, gamblers and expatriates trying to avoid capital controls.
In calling for the establishment of a Provincial regulatory body to address MSBs, Council agreed unanimously that the body should have:
- A robust licencing regime similar to Quebec, which generates enough revenue to pay for the department that oversees it;
- The authority and investigative tools to conduct inspections of MSBs and detect suspected underground operations;
- Adequate resources and trained staff to proactively conduct inspections of both licenced and suspected underground MSBs;
- The ability to develop and share intelligence on suspected underground MSBs with local law enforcement, local government and FINTRAC;
- The technology and staff trained in data analytics and intelligence analysis to monitor suspicious activity around MSBs;
- Resources to provide education and outreach towards MSB operators as well as the banking and credit union industry regarding new trends, “red-flags” and modalities of criminal activity; and
- The ability to work with key government and private sector stakeholders to develop strategic plans, and establish clear performance metrics.
Council also said the new body should have the mandate, strategic direction, resources and tools to proactively regulate MSBs. It recommends that the definition of MSBs be expanded to include White Label Automated Machines and armoured cars services.
There were 66 entities operating 75 MSBs in the City of Richmond in 2019, ranging from government agencies such as Canada Post to small retail operations.