Skip to content.

Budget 2019: Financial Institutions Update

The 2019 federal budget (the “Budget”) included a number of measures directed to the financial services sector, including (i) measures aimed at improving the effectiveness of Canada’s anti-money laundering regime, (ii) plans to introduce legislation to implement the retail payments oversight framework that was previously announced in a 2017 consultation paper, (iii) the appointment of a new governance council to assist the Financial Consumer Agency of Canada with its expanded mandate, (iv) the continuation of the open banking consultation process, (iv) measures intended to modernize the federal unclaimed assets framework, and (v) various other updates to financial services statutes, including updates intended to track certain recent changes to the Canada Business Corporations Act (“CBCA”).

Strengthening the Anti-Money Laundering Regime

The federal government (the “Government”) announced significant investments aimed at strengthening anti-money laundering/ counter-terrorism financing enforcement and oversight capabilities, including plans to create (i) a new Anti-Money Laundering Action, Coordination and Enforcement (“ACE”) Team and (ii) a new Trade Fraud and Trade-Based Money Laundering Centre of Expertise (“TFTBMLCE”), as well as increased funding to the Royal Canadian Mounted Police and the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”). The ACE Team will focus on improving inter-agency coordination, while the TFTBMLCE is aimed at improving the ability of the Canada Border Services Agency and FINTRAC to combat trade-based money laundering in Canada. 

The additional funding to FINTRAC will in part be aimed at improving FINTRAC’s capabilities relating to the Fintech industry, the cryptocurrency industry, foreign money services businesses, prepaid products and customer identification, as well as providing for additional public-private partnerships to improve the effectiveness of the anti-money laundering regime. In addition, the funding is aimed at increasing FINTRAC’s ability to oversee and examine the real estate and casino sectors with a focus on British Columbia.

These increases in resources follow the recent issuance by FINTRAC of its administrative monetary penalties policy and indicate support for increased enforcement of AML-related matters going forward. 

In addition, the Government announced a number of proposed AML-related legislative changes, including:

  • Amending the Criminal Code to criminalize “recklessness” in the context of money laundering, where a person moves money on behalf of another person while being aware of a risk of money laundering and continues the activity despite the risk. This is a significant expansion of the offence, which could impact a number of businesses handling funds that are not currently subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (“PCMLTFA”);
  • Amending the PCMLTFA to add Revenu Québec and the Competition Bureau as disclosure recipients of FINTRAC financial intelligence; and
  • Amending the PCMLTFA to modify the timing and discretion of FINTRAC to make public information relating to an administrative monetary penalty (“AMP”) and to exclude the identity of a reporting entity, the nature of violations and the amount of the penalty from the scope of any court confidentiality order in respect of the AMP.

Payments Regulation

The Government announced that it will introduce legislation to implement the new retail payments oversight framework, which will apply to payment service providers (“PSPs”) and require PSPs to establish sound operational risk management risk practices and to protect user funds from losses. Significantly, the Budget notes that the Bank of Canada will be the regulator charged with oversight of this framework, and will maintain a registry of regulated PSPs. In addition, the Government intends to introduce amendments to the Canadian Payments Act to modernize Payments Canada’s governance framework, following its 2018 legislative review process. 

Open Banking

The Budget refers to the ongoing consultations on the merits of open banking. The Advisory Committee on Open Banking will deliver a report to the Minister of Finance following completion of these consultations. Thereafter, the Government will assess the path forward on open banking in Canada. 

Consumer Protection Governance Council

The Government announced that the Minister of Finance will appoint a new governance council to support and assist the Financial Consumer Agency of Canada as it takes on an increased mandate in connection with the new financial consumer protection framework.

Updates to Federal Financial Sector Statutes

The Government announced its plan to introduce amendments to the federal financial sector statutes (the Bank Act, Insurance Companies Act and Trust and Loan Companies Act) and related legislation such as the Bank of Canada Act, Canada Deposit Insurance Corporation Act and Payment Clearing and Settlement Act.  These amendments will modernize the corporate governance framework applicable to federally regulated financial institutions (“FRFIs”) to track changes to the CBCA, including changes relating to the board election process and the use of technology to communicate with shareholders. The Government also intends to introduce requirements for FRFIs to disclose diversity policies relating to the composition of their boards and senior management. Finally, the Government intends to introduce a number of technical amendments to such statutes, including in respect of how investors, creditors and other participants may be compensated as a result of a decision by financial sector authorities to wind down, sell or restore to viability a failing bank or financial market infrastructure. 

Unclaimed Assets

The Government announced plans to introduce legislative amendments to various federal statutes to expand the scope of the existing unclaimed deposits framework to include other assets, in particular foreign denominated bank accounts and unclaimed pension balances from terminated federally regulated pension plans, with the goal of protecting Canadians’ unclaimed assets.

Sustainable Finance

The Government noted that the Expert Panel on Sustainable Finance will submit its final report this spring. The Government observed that the way Canadian companies and financial institutions address climate change issues and capitalize on clean growth opportunities will impact long-term economic and environmental development, and encouraged Canadian companies and federal crown corporations, where appropriate, to voluntarily adopt the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosure.


As the Government takes steps to implement the various initiatives outlined in this Budget, financial institutions can expect a number of important regulatory and legislative changes to follow in the near future.