As of October 1, 2025, new beneficial ownership verification requirements came into force in Canada, significantly changing the day-to-day operations of regulated companies. These changes are aimed at increasing the transparency of corporate structures and preventing the use of Canadian companies for money laundering and terrorist financing.
Money Service Businesses in Canada are reporting entities regulated by FINTRAC under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Starting in October 2025, these companies are required to report to Corporations Canada any material discrepancies between the beneficial ownership information they have obtained and the data on persons with significant control available in the Corporations Canada database. This applies to active corporations incorporated under the federal Canada Business Corporations Act.
MSBs include companies engaged in currency exchange, money transfers, cheque cashing, virtual currency transactions, and other financial services. Before beginning operations in Canada, it is necessary to register a money services business or foreign money services business with FINTRAC, even if the company already has provincial registration or a license. The new discrepancy reporting requirements are added to existing compliance obligations.
Checking the Corporations Canada database is mandatory when a reporting entity assesses a federal corporation as having a high risk of money laundering, terrorist financing, or sanctions evasion — such an assessment is made during the initial client review or as part of ongoing monitoring. The risk level is determined based on multiple factors: the client’s type of business, geographic scope of operations, ownership structure, transaction volume, and signs of unusual behavior.
It is important to understand that the obligation to check does not arise automatically for all corporate clients, but only for those classified as high risk under the company’s internal risk assessment system. For CBCA corporations that do not present a high risk but for which a material discrepancy has been identified, the reporting entity may voluntarily submit a beneficial ownership discrepancy report. This approach helps balance compliance with operational efficiency.
To submit a discrepancy report, access to two separate systems is required: FINTRAC Web Reporting for registration as a reporting entity and My ISED Account for the actual submission of the discrepancy report to Corporations Canada. Many MSBs mistakenly believe that FINTRAC registration is sufficient, but without an active ISED account, it is impossible to submit a report.
Reporting entities that need access to the FINTRAC Web Reporting system must first contact FINTRAC by email at F2R@fintrac-canafe.gc.ca. Once access is granted, the system allows reporting entities with a small reporting volume to submit reports individually in electronic form. The system is designed with security in mind and includes data validation mechanisms before submission.
If the reporting entity is not yet registered, the registration process must be completed through the FINTRAC Web Reporting system, after which the organization management section should be accessed to obtain the information needed to submit a discrepancy report. This section contains details about the type of reporting entity, the registration number, and other identification parameters that will be required when completing the form.
To submit a report on behalf of a reporting entity, you must have a My ISED Account or create one — details on setting up the account are available on the My ISED Account page. To register an ISED account, you need to visit the online filing centre and select Sign in in the upper-right corner of the screen, then log in using GCKey or a sign-in partner.
The account creation process includes identity verification and two-factor authentication. When completing the ISED account creation, personal information will be requested, including name, email address, and contact details, after which a confirmation email will be sent to verify the address. It is important to complete verification before the link in the email expires. MapleBiz specialists can help set up both systems and ensure seamless access to reporting.
A material discrepancy is a significant inconsistency between the beneficial ownership information obtained by a reporting entity from a client and the information entered in the federal Corporations Canada registry. The key word here is “significant.” Not every inaccuracy requires reporting.
Although FINTRAC and Corporations Canada have not yet officially issued a complete list of material discrepancies, examples of situations in which a material discrepancy may arise include cases where the beneficial owners listed in the registry are different individuals from those in your records, or where differences are noted in the stated percentage of ownership or control of the corporation. For example, if your records show that a person owns 40% of the shares, while the registry shows only 15%, this is a material discrepancy.
Other examples include the complete absence from the registry of a beneficial owner known to the reporting entity, or the presence in the registry of a person whom the client did not mention during the review. A material discrepancy exists when the beneficial ownership information collected by the reporting entity materially conflicts with publicly disclosed data — although regulators provide limited guidance, missing beneficial owners are considered material.
A material discrepancy does not include a mismatch arising from a spelling error or a minor change in a name or address, the use of a business address in one source of information and a residential address in another, or the unavailability of information to the public due to an exception or exemption. These technical inaccuracies do not require reporting.
The critical distinction lies in the potential to conceal or distort the actual ownership and control structure. The requirement is to compare the reporting entity’s beneficial ownership records with the federal list of persons with significant control to ensure there are no material discrepancies — if the comparison reveals a material discrepancy, that is, a mismatch significant enough to conceal or distort information about who owns or controls the corporation, the reporting entity must submit a discrepancy report to Corporations Canada within 30 days. Proper interpretation of this criterion requires experience and contextual understanding.
Preparing a discrepancy report requires careful collection of information both about the reporting entity itself and about the identified discrepancy. Inaccurate or incomplete information about the reporting entity may result in the beneficial ownership discrepancy report being deemed invalid. This means that even if the discrepancy is real, technical errors in the report may render it unusable.
The report must contain the full identification details of the reporting entity from the FINTRAC Web Reporting system, including the FINTRAC registration number, the type of reporting entity, the legal name, and contact information. This report must include the following information: the reporting entity’s details, and when preparing the report, the type of reporting entity must also be specified. Next, the details of the corporation in respect of which the discrepancy was identified must be provided: full name, Corporations Canada registry number, a description of the discrepancy identified, and the date it was discovered.
The description of the discrepancy must be specific enough to allow Corporations Canada to conduct a review. It is not enough to write “beneficial ownership discrepancy” — you must specify exactly which data differ, which individuals are missing or added, and which ownership percentages are inconsistent. MapleBiz offers services for preparing comprehensive documentation for discrepancy reports, ensuring compliance with all regulatory requirements.
Corporations Canada will process the discrepancy report and send an acknowledgment of receipt to the contact person’s email within 10 business days. Reporting entities must report a material discrepancy to Corporations Canada within 30 days after the day it is identified — they are not required to report the discrepancy if it is resolved within 30 days after the day it is identified. This acknowledgment must be kept in the company’s records.
Amendments to submitted reports are currently not possible, and a new report will need to be filed — reporting entities must retain the report confirmation and other supporting documentation as proof of compliance with their obligations. This requirement underscores the importance of careful review before submission. The retention period is five years from the date of filing, which is consistent with FINTRAC’s general record-keeping requirements.
Meeting discrepancy reporting deadlines is critically important not only for fulfilling regulatory obligations, but also for protecting the company itself from administrative penalties and reputational risks. Reporting entities are required to report a material discrepancy to Corporations Canada within 30 days after the day it is identified when the following criteria are met: the reporting entity determines that the corporation presents a high risk of money laundering, terrorist financing, or sanctions evasion, and there is a material discrepancy in the beneficial ownership information that has not been resolved within 30 days.
A material discrepancy may be reported immediately after it is identified, without waiting for the 30 days to expire, and there is also no requirement to re-check the Corporations Canada database during this period to determine whether the material discrepancy has been resolved. This means the company has a choice: either file the report immediately or use the 30-day window to try to resolve the discrepancy with the client.
The practical strategy depends on the nature of the discrepancy. If it is an obvious error that the client can quickly correct by updating the registry data, it makes sense to give the client the opportunity to do so. If the discrepancy indicates intentional concealment of information or the client is uncooperative, immediate filing protects the MSB from allegations of delay. If a previously reported discrepancy is identified again (for example, during ongoing monitoring) and it has not been resolved, it must be reported again.
Inaccurate or incomplete information about the reporting entity will result in the beneficial ownership discrepancy report being deemed invalid, and amendments to submitted reports are currently not possible, so a new report will have to be filed. This creates a serious risk: even if the discrepancy was identified in time, technical errors in the report may cause it to be treated as not filed, and the 30-day deadline may be missed.
The consequences of non-compliance can be significant. Non-compliance is now an offense under the PCMLTFA, punishable on summary conviction by a fine of up to $250,000 or imprisonment for up to two years, or on indictment by a fine of up to $500,000 or imprisonment for up to five years. In addition to fines, suspension or cancellation of the MSB registration is possible, which effectively means the business will cease operations. MapleBiz specializes in supporting MSBs with compliance and can ensure that all discrepancy reporting requirements are met.
Navigating FINTRAC’s complex regulatory requirements, especially in light of the new discrepancy reporting obligations, requires specialized knowledge and experience. MapleBiz offers comprehensive legal services for Money Service Businesses, covering all aspects of beneficial ownership compliance.
Our specialists assist with the initial MSB registration with FINTRAC, setting up internal controls and beneficial owner verification procedures, developing a client risk assessment methodology, and registering in both required systems — FINTRAC Web Reporting and My ISED Account. We ensure the proper interpretation of the concept of material discrepancy and help avoid both false alarms and missed real discrepancies.
MapleBiz also provides support in preparing and filing discrepancy reports, checking the completeness and accuracy of all mandatory fields before submission, which eliminates the risk of the report being returned due to technical errors. Our team monitors changes in regulatory requirements and helps adapt the company’s procedures to new standards. During FINTRAC examinations, we represent clients’ interests and help demonstrate compliance with all reporting requirements.
A properly built compliance system not only protects against fines and sanctions, but also supports sustainable business growth and strengthens the trust of banking partners and clients. Contact MapleBiz for a consultation on your specific situation — we will help ensure full compliance with FINTRAC beneficial ownership and discrepancy reporting requirements, allowing you to focus on growing your business.
