What banks ask fintech companies during onboarding

Banking and payment processor onboarding for fintech companies, particularly for MSBs and payment platforms, is a structured diligence process. Banks are assessing regulatory risk, financial crime exposure, and compliance program quality before they agree to provide services. Knowing what they will ask for — and having it ready — significantly reduces the time and uncertainty in the process.

Registration and regulatory status

The first area of inquiry for any fintech company that moves money is regulatory status. Banks and processors ask whether the company is registered as an MSB with FINTRAC, whether it holds any provincial licences, and whether it is subject to oversight by any other regulator.

For companies that are required to be registered but are not yet registered, this question is a blocker. Banks are not willing to provide payment services to unregistered MSBs, and many are not willing to provide services to companies that are in the process of registering without a clear timeline and compliance program in place.

Having the registration number, the registration date, and any conditions attached to the registration available at the outset of onboarding conversations saves time. Being able to explain the regulatory analysis clearly, including why registration is or is not required, is important if the answer is more complex than a simple yes or no.

AML compliance program

Banks and processors will ask to review the AML compliance program. What they are assessing is whether the company has a real program in place, not just a document.

The documentation banks typically request includes the written AML policies and procedures, the risk assessment, the training program and records, and a description of the transaction monitoring system. Some banks also ask for the most recent periodic compliance review and any significant compliance events or regulatory contact.

The quality of the response to this request affects the onboarding decision. A compliance program that is clearly current, specific to the actual business, and supported by evidence of implementation is a positive signal. A program that is generic, outdated, or has obvious gaps will extend the onboarding process and may result in a declined application.

Ownership and control

Banks apply anti-money laundering controls to their own customer onboarding, which means they conduct know-your-client diligence on the fintech company as a customer. For corporate customers, that diligence includes identifying and verifying beneficial ownership, meaning the natural persons who ultimately own or control the company.

Beneficial ownership disclosure requirements apply to individuals who own 25% or more of the company, and to individuals who exercise significant control. For companies with complex cap tables, multiple classes of shares, or ownership through holding companies and trusts, preparing the ownership chart and verification documents before the banking conversation begins avoids delays.

Transaction profile and prohibited use cases

Banks and processors ask for a description of the transaction types the company processes, the customer types it serves, the geographic reach of its operations, and the expected transaction volumes and average transaction values.

This information is used to assess whether the company’s business model falls within the bank’s risk appetite and to establish the baseline against which the company’s activity will be monitored going forward. A company that is unable to describe its transaction profile clearly, or whose description does not match its actual operations, creates uncertainty that prolongs the process.

Banks also ask about prohibited use cases. Most payment banks and processors have lists of activities they will not support, including unlicensed financial services, certain gambling operations, sanctioned jurisdictions, and specific high-risk industries. Being able to confirm clearly and accurately that the company does not operate in prohibited areas is part of the onboarding process.

What to have ready before banking conversations begin

The most efficient approach to bank and processor onboarding is to have the following ready before the first substantive conversation: FINTRAC registration documentation, a current AML compliance program with supporting records, a beneficial ownership chart with verification documents for ultimate beneficial owners, a clear description of the product and the transaction flow including a payment flow diagram, a transaction volume and profile summary, and any existing banking or processor agreements that demonstrate the company’s operating history.

Related topics

• MSB banking risk in Canada
• MSB registration in Canada
• FINTRAC compliance in Canada
• Six pillars of MSB defensibility