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Insights and Expertise

In Canada, for example, a new regulator, the Bank of
Canada, came online in 2025 and regulates Payment
Service Providers (PSPs). Entities that transmit funds
or hold funds in hosted accounts (that is, MSBs) are
PSPs that are also regulated by the Bank of Canada.

However, some entities that never touch funds but are
involved in authorizing or processing the initiation of
electronic payments are regulated as PSPs. They have
to register with the Bank of Canada as well as adopt
and comply with a raft of policies that would be a sur-
prise for a U.S. ISO that never touches the funds.

The Retail Payment Activities Act (RPAA) is the new
Canadian law bringing the Bank of Canada into regu-
lation of PSPs. The RPAA is brand new, and a lot of
U.S., Canadian and other nations' ISOs, processors and
other payments companies are still working their way
through exactly how to comply with its requirements.

The takeaway here is that a U.S. ISO should not expect
a 'free ride' in each new country where they do busi-
ness. Some jurisdictions may hold the ISO to a level of
compliance that is altogether foreign to the U.S. experi-
ence.
OFAC sanctions

When boarding merchants for a U.S. acquirer, the mer-
chant and its principals are checked against sanctions
lists of the U.S. Department of the Treasury Office of
Foreign Assets Control (OFAC). Foreign countries have
their own sanctions lists as well as local standards of
AML and sanctions compliance.

Operating as an ISO in a foreign country would require
the ISO to adhere to those local standards. However, a
U.S.-owned foreign ISO should also comply with U.S.
sanctions laws.

The US Foreign Corrupt Practices Act (FCPA) makes it
illegal to bribe foreign government officials to win or
keep business. In some foreign countries, especially in
the developing world, it is sometimes difficult to get
a business going without numerous government ap-
provals. These approvals are sometimes hard to get
without a bribe. Don't do it; it's not worth it. A U.S. per-
son could face up to 20 years in a U.S. prison for an
FCPA violation.

Get legal advice: Local, experienced payments counsel
can advise you on how to get up and running quickly.
It's recommended.

In publishing The Green Sheet, neither the author nor the publisher
are engaged in rendering legal, accounting, or other professional
services. If legal advice or other expert assistance is required, the
services of a competent professional should be sought. For further
information on this article, please contact Adam Atlas, Attorney at
Law email: atlas@adamatlas.com, Tel. 514-842-0886.

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