PI-7670 Was Withdrawn: What That Means for Merchant Servicing

PI-7670 was a FINTRAC policy interpretation that many payment companies leaned on for years. Its best-known position was that merchant servicing — broadly, providing payment acceptance and settlement services to merchants — was not a money services business activity, which kept a large slice of the acquiring and processing industry outside MSB registration.

That position is gone. FINTRAC withdrew the PI-7670 positions on merchant servicing and payment processing effective April 27, 2022, and confirmed the change in two notices — one dated April 27, 2022 and a follow-up dated July 21, 2022. A withdrawn interpretation is historical context only. It can explain why the industry structured itself a certain way; it cannot support a scoping decision made today.

FINTRAC's policy interpretations are answers to specific questions, grounded in the facts presented and the law in force at the time they were written. When the law or FINTRAC's reading of it changes, the interpretation does not age gracefully — it simply stops being authority. FINTRAC has been explicit about this framing, and the PI-7670 withdrawal is the clearest example in the payments space.

The practical consequence: a business model that was designed around PI-7670 has no current regulatory footing for that design. That does not automatically mean the business is an MSB — it means the question is open again and has to be answered from the current statute and the current guidance, not from a retracted document.

The current starting points are the PCMLTFA's MSB definitions — s. 5(h) for domestic businesses and s. 5(h.1) for foreign businesses directing services at persons in Canada — together with the definitions in PCMLTFR s. 1(2), registration under PCMLTFA s. 11.1, and FINTRAC's 2022 notices and current MSB registration page, which set out its present position on payment service providers.

The operational question is what the business actually does with funds, not what its contracts or marketing call the service. A company that sits in the flow of funds — receiving merchant proceeds into accounts it controls and settling them onward, or a payroll platform that briefly holds employer money before paying employees — faces a very different analysis than a gateway that only passes payment messages and never touches money. Businesses typically map each product's funds flow step by step, then test each step against the funds-remitting and funds-transmitting limbs of the MSB definition and against the 2022 notices. Where the answer is unclear, the honest options are a policy interpretation request to FINTRAC or legal advice on the specific facts — not analogy to a withdrawn PI.

The PI-7670 story is also a reminder that MSB scope is not static. Since the withdrawal, cheque-cashing services have been prescribed as an MSB service under PCMLTFR s. 29.1; armoured-car transport of currency or negotiable instruments became a reporting-entity obligation in force July 1, 2024; and acquirer services for private automated banking machines became a registerable MSB obligation in force October 1, 2025.

For a payment company, that means a scoping analysis has a shelf life. A conclusion reached in 2021 on PI-7670 logic was already stale by mid-2022; a conclusion reached today should carry its date and the guidance it relied on, so it can be revisited when the perimeter moves again.

Whatever conclusion the re-analysis reaches, the durable asset is the record. A defensible file usually contains: a dated funds-flow description for each product; the statutory provisions considered (the s. 5(h) and s. 5(h.1) limbs, PCMLTFR s. 1(2) definitions); the specific guidance consulted with its publication date, including the 2022 notices; an explicit note that PI-7670 was considered only as historical context; and the reasoning and sign-off for the conclusion.

If the analysis lands inside MSB scope, registration under PCMLTFA s. 11.1 follows, along with a compliance program under PCMLTFA s. 9.6 and PCMLTFR ss. 156–157 — a compliance officer, written policies and procedures, a risk assessment, training, and a two-year effectiveness review. If it lands outside, the documentation is what shows the question was actually asked and answered on current law, rather than inherited from a withdrawn interpretation.