Canadian money services businesses (MSBs) have faced a dramatic tightening of beneficial ownership transparency requirements as of October 1, 2025. Reporting entities regulated by FINTRAC are now required to report to Corporations Canada any material discrepancies between the beneficial ownership information they obtained and the data on individuals with significant control (ISC) in the Corporations Canada database. This requirement applies to active corporations incorporated under the Canada Business Corporations Act (CBCA) that the reporting entity considers high-risk.
The changes affect not only the data collection process — they fundamentally change the logic of compliance systems. Previously, MSBs only needed to collect and document information about clients’ beneficial owners. Now, when dealing with high-risk clients, active reconciliation with the federal registry and mandatory reporting of discrepancies are required. These changes are aimed at identifying schemes for money laundering, terrorist financing, and sanctions evasion through the use of corporate structures with distorted ownership information.
MSBs must consult the Corporations Canada database for corporations incorporated under the Canada Business Corporations Act that they have assessed as presenting a high risk of money laundering or terrorist financing. It is critically important to understand: the obligation is not universal for all corporate clients. It applies exclusively to federal CBCA corporations classified as high-risk on the basis of the MSB’s internal risk assessment.
The reconciliation process must become an integral part of both the initial onboarding review and ongoing monitoring of the business relationship. This means that MSB beneficial ownership obligations now include not only collecting information from the client, but also verifying it through the government registry. This approach creates an additional control layer that makes it more difficult to use nominee owners and hidden structures for illegal activity.
The absence of a clear regulatory definition of "high risk" creates an area of interpretation for MSBs. Reporting entities must consult the Corporations Canada database when fulfilling their beneficial ownership obligations for a federal corporation that they have assessed as having a high risk of money laundering, terrorist financing, or sanctions evasion, and this consultation must be conducted when the reporting entity considers the federal corporation high-risk either during onboarding or during ongoing monitoring.
In practice, this means that MSBs must develop internal risk assessment criteria that include factors such as: the client’s jurisdiction of operation, the complexity of the corporate structure, the use of multi-tier holding companies, inconsistencies between the stated business model and transactional activity, links to higher-risk industries (real estate, commodities trading, cryptocurrencies), as well as indicators from regulatory databases and past incidents. The specialists at MapleBiz help develop risk-based methodologies tailored to the specific activities of a particular MSB and aligned with FINTRAC expectations.
The register of Individuals with Significant Control (ISC) is a public database maintained by Corporations Canada that contains information about individuals who own or control federal corporations. Since January 22, 2024, corporations created under the Canada Business Corporations Act have been required to file information about individuals with significant control with Corporations Canada. This information is partially available for public search.
The ISC register was created to increase transparency of corporate ownership and combat the use of anonymous shell companies for money laundering, tax evasion, and sanctions circumvention. However, its effectiveness depends on the accuracy of the information submitted — and this is where the new role of MSBs as "verifiers" of corporate information arises.
Although the terms are often used interchangeably, there are subtle but important differences between the concepts. An ISC is someone who owns, controls, or manages 25% or more of the shares individually, jointly, or in concert with one or more persons, or who has de facto control over the corporation without owning any shares. A beneficial owner in FINTRAC terminology is an individual who directly or indirectly owns or controls 25% or more of a corporation or other entity.
The key difference in application is that ISC data must be filed with the federal registry by CBCA corporations, whereas beneficial ownership information is collected by MSBs as part of their anti-money laundering obligations for a broader range of entities (including partnerships, trusts, and provincial corporations). MSB individuals with significant control are a specific category for federal corporations, while beneficial ownership is a broader compliance concept.
It is possible for the beneficial ownership information obtained by an MSB from a client to differ from the ISC data in the Corporations Canada registry. This can happen for various reasons: from simple errors and delayed registry updates to deliberate distortion of ownership information to conceal the true controlling persons.
Some information about individuals with significant control of federal business corporations is available through the Corporations Canada online search. To access it, MSBs can use the free search on the federal registry website, where they need to enter the corporate name, corporation number, or business number.
The public portion of the registry includes: the ISC’s full name, month and year of birth, a description of the nature of significant control, a service address (if provided), or a residential address (if a service address is not provided), as well as the date the person became or ceased to be an ISC. However, some information remains confidential, including citizenship and the full date of birth. It is important to note that the database is still being populated, as corporations file ISC information as their annual reporting deadlines arise.
If difficulties arise in interpreting registry data or matching it with internal records, MapleBiz offers advisory support on corporate structures and compliance procedures for MSBs.
Once a material discrepancy is identified between client data and the ISC register for a high-risk federal corporation, MSBs must file a Beneficial Ownership Discrepancy Report. The process includes several technical steps that require advance preparation.
If the reporting entity is not yet registered, it must complete registration in the FINTRAC Web Reporting System and then go to the "Organization management" section in the FWR system to obtain the necessary information for filing a discrepancy report. This system is used not only for discrepancy reports, but also for other mandatory FINTRAC reports.
Registration requires providing detailed information about the organization, including: the MSB’s full legal name, the MSB registration number with FINTRAC, the type of reporting entity, and the contact information of the responsible person. This data will later be automatically populated in discrepancy reports, so it is critically important to ensure its accuracy at the initial registration stage.
To submit a report on behalf of the reporting entity, you must have a My ISED Account or create one. The account creation process is standardized through the Government of Canada portal and requires verification of the filer’s identity.
The sequence of actions for filing: log in to the federal corporation search on the Corporations Canada website, enter the corporation details and select the required one, scroll down the results page and select "Report an issue", log in to your My ISED Account (if you are not already logged in) to access the Beneficial Ownership Discrepancy Reporting application, and complete the report form with all required information. Inaccurate or incomplete information about the reporting entity may result in the beneficial ownership discrepancy report being deemed invalid, so careful review of all fields is necessary before submission.
The form requires details of the nature of the discrepancy: exactly which data do not match (owners’ identities, control percentages, addresses), what information is contained in the MSB’s records, and what information appears in the Corporations Canada registry. Corporations Canada will process the discrepancy report and send an acknowledgment of receipt to the contact person by email within 10 business days.
If the comparison reveals a "material discrepancy" — a mismatch significant enough to conceal or distort information about the corporation’s owners or controlling persons — the reporting entity must file a beneficial ownership discrepancy report with Corporations Canada within 30 days. This period is counted from the moment the discrepancy is identified, not from the moment the review was conducted.
Critical exception: if the discrepancy is resolved within 30 days, no report is required. This means that if the MSB discovered a mismatch but within 30 days the corporation updated its data in the registry and the information now matches, the obligation to file a report falls away. However, there is no requirement to re-check the database before the 30-day period expires — the MSB may file the report immediately after discovering the discrepancy.
When filing a beneficial ownership discrepancy report with Corporations Canada, a copy of all acknowledgments received must be retained, and the acknowledgment copy must be kept for 5 years from the date the record was created. These documents serve as evidence of compliance with FINTRAC examinations and corporate discrepancies require careful documentation.
The MapleBiz team can help MSBs integrate discrepancy reporting procedures into their existing compliance system, develop checklists, and automate filing deadline reminders.
The definition of the "materiality" of a discrepancy remains one of the most contentious aspects of the new requirements. A material discrepancy is a significant mismatch between the beneficial ownership information of a corporation incorporated under the Canada Business Corporations Act and the individuals with significant control listed in the Corporations Canada database, which may affect the correct identification of the persons who own or control the corporation.
Examples of situations in which a material discrepancy may arise: the beneficial owners in the registry are different individuals from those in your records, any differences in the stated percentage of ownership or control of the corporation, identification information does not match what the client provided to you, such as: addresses, names, dates of birth, or the owners’ citizenship, any indications or information suggesting that the public records are inaccurate.
The most serious discrepancy is the complete absence from the registry of a person who, according to the MSB, is a beneficial owner with a 25% or greater interest. For example, if the MSB’s internal documents show that Ivan Petrov owns 40% of the shares of ABC Inc., but the Corporations Canada registry does not list anyone with that name among the ISCs at all, this is a clear material discrepancy requiring reporting.
Similarly, if control percentages differ significantly: the registry shows that a person owns 15% of the shares (below the ISC threshold), but the MSB has determined that in fact this person controls 35% through a combination of direct and indirect ownership — this is also a material discrepancy. Differences in personal data may also be material if they are significant enough to create doubt about identity: for example, a completely different date of birth, or a substantially different address in another province or country.
Although regulators provide limited guidance, missing beneficial owners are considered material, while minor typographical errors are not. Minor differences that usually do not require reporting include: typos in names (for example, "John" vs "Jon", "Smythe" vs "Smith"), small variations in addresses (for example, "Street" vs "St.", "Avenue" vs "Ave."), and differences in date format without changing the actual date.
However, there is a gray area of interpretation here. For example, is "Robert Johnson" different from "Bob Johnston"? The first may be a variation of a name, while the second is already potentially a different person. MSBs should apply a reasonable standard: if the difference could lead an outside observer (for example, an investigator or tax auditor) to draw the wrong conclusion about who the true owner is, it is likely material.
The critical principle: if there is doubt about the materiality of a discrepancy for a high-risk corporation, it is safer to file a report. The reporting entity is not required to resolve a material discrepancy directly with the client — the MSB’s responsibility is limited to notifying Corporations Canada of the identified mismatch.
Failure to comply with the new discrepancy reporting obligations carries serious consequences, including both administrative penalties and potential criminal liability.
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. These amounts apply to criminal violations involving intentional misconduct or gross negligence in relation to the obligations.
In addition, FINTRAC has the authority to impose Administrative Monetary Penalties (AMPs) for compliance violations. AMP amounts vary depending on the severity of the violation: minor violations may result in fines of up to several thousand dollars, serious violations — tens of thousands of dollars, and very serious violations — up to $500,000 per violation for legal entities.
Practice in 2025 shows that FINTRAC actively uses its penalty powers. The absence of an effective compliance program, systematic failure to file suspicious transaction reports, and failure to conduct due diligence on higher-risk clients — all of these lead to multimillion-dollar penalties. MSBs that ignore the new discrepancy reporting obligations risk coming to the regulator’s attention during the next examination.
In addition to direct financial losses, FINTRAC penalties are published on the regulator’s official website, causing reputational damage. Banks and other financial partners may terminate relationships with an MSB that has a history of compliance violations. In extreme cases, MSB registration may be revoked, meaning the business can no longer operate legally in Canada.
MapleBiz specializes in legal support for financial services, including MSBs, and offers comprehensive solutions for implementing and maintaining compliance with the new beneficial ownership reporting requirements.
Audit of existing procedures: We conduct a detailed analysis of the MSB’s current compliance program, identify gaps in beneficial owner identification procedures, and assess readiness to meet the new discrepancy reporting obligations. Development of a risk assessment methodology: We create individualized criteria for classifying corporate clients as high-risk, taking into account the MSB’s specific activities, develop risk matrices, and establish triggers for mandatory checks against the Corporations Canada database. Procedural documentation: We develop step-by-step instructions for staff on reconciling with the ISC register, create templates for documenting the review and reporting process, and prepare record retention policies in line with the requirements.
Technical integration: We help implement software solutions to automate client screening against the Corporations Canada database, configure reminder systems for review and reporting deadlines, and integrate processes with the MSB’s existing CRM and compliance systems. Staff training: We conduct training for compliance officers and client-facing staff, explain the differences between beneficial ownership and ISC, and train them to recognize material discrepancies. Registration in reporting systems: We assist with registration or data updates in the FINTRAC Web Reporting System, help create a My ISED Account and set up access for responsible persons, and test the reporting process before live use.
Ongoing support: We provide advice when contentious issues arise in interpreting registry data, help with communications with FINTRAC and Corporations Canada in response to inquiries, and regularly inform clients about changes in regulatory requirements and enforcement practice. Representation during examinations: We support MSBs during FINTRAC examinations, help prepare documentation to demonstrate compliance, and represent the client’s interests in disputes with the regulator.
Our specialists have a deep understanding of both Canadian anti-money laundering law and the practical realities of MSB operations. We help strike a balance between strict regulatory compliance and business process efficiency, minimizing compliance costs while maximizing protection against risk.
Contacting MapleBiz at the implementation stage of the new requirements helps avoid costly mistakes, build a resilient compliance system, and ensure long-term compliance with Canada’s evolving regulatory standards for MSBs.
