Federal government proposes new Fintech and non-financial activity regulations for financial institutions

On October 17, 2026, the Department of Finance published four sets of proposed regulations to implement expanded non-financial business and investment powers introduced through the Budget Implementation Act, 2018, No. 1 (the “Fintech Amendments”). The publication of these proposed regulations marks a long-awaited step toward implementing the Fintech Amendments, which were first enacted more than eight years ago, but are not yet in force.

As discussed in our previous blog on Budget Bill 2018: Amendments to Financial Services Statutes, the Fintech Amendments were intended to provide banks, bank holding companies, foreign banks, federally regulated insurance entities, and trust and loan companies (collectively, “FRFIs”) with greater flexibility to undertake Fintech and other non-financial activities both directly and by way of investments.

This article focuses on the proposed Non-Financial Activities (Banks and Bank Holding Companies) Regulations (the “Proposed Regulations”) with a particular focus on banks; however, similar regulations are also proposed under federal legislation applicable to foreign banks, trust and loan companies, and insurance companies.

Key takeaways

• Expanded powers: The Proposed Regulations are a necessary step to operationalize the Fintech Amendments and give FRFIs greater flexibility to undertake and invest in Fintech and other non-financial activities, subject to prescribed limits and conditions.
• Three avenues for expanded activity: The Fintech Amendments and Proposed Regulations would expand the ability of banks to carry on and invest in entities that carry on non-financial activities in the following ways:
  • the list of Specified Non-Financial Activities that they can carry on directly would be expanded;
  • they would be permitted to invest in a new category of investment, “Majority Financial Services Entities”, which can carry on non-financial activity (subject to current restrictions in the Bank Act around prohibited activities), provided that at least 60% of its activities fall within a certain set of Financial Services Activities; and
  • their subsidiaries that are FRFIs or permitted investments under section 468(2) would be permitted to carry on Specified Non-Financial Activities (referred to as “Entities Engaging in Non-Financial Activities”).
• From transaction-specific approvals to portfolio-based limits, monitoring and reporting: The Fintech Amendments and Proposed Regulations would replace the requirements for prior ministerial approval to carry on certain information processing and information technology activities and invest in entities merely because those entities engage in such activities, with quantitative limits, ongoing compliance monitoring and, for institutions with equity of $12 billion or more, transaction and annual reporting requirements.
• Portfolio limits, calibrated to bank size: Subject to specified exclusions, covered non-financial revenue would be capped at 15% of annual revenue for institutions with equity below $12 billion and 10% for larger institutions. Aggregate exposure to “Majority Financial Services Entities” and “Entities Engaging in Non-Financial Activities” would be capped at 10% of regulatory capital. Breaching either limit would make covered investments “temporary investments” under the Bank Act.
• Consultation period: Comments on the Proposed Regulations are due November 16, 2026.

These reforms have taken on even greater significance since 2018, given developments in cloud computing, artificial intelligence, as well as broader digital transformation and shifting consumer preferences, as referenced in the Regulatory Impact Analysis Statement (“RIAS”) accompanying the Proposed Regulations. The RIAS further notes that the existing restrictions may constrain FRFIs’ ability to adopt and invest in new technologies, with broader implications for competition, innovation, capital investment and productivity in Canada’s financial sector.

Key aspects of the Fintech Amendments and Proposed Regulations

Expanded direct non-financial activities

The Proposed Regulations would permit banks to engage in the following non-financial activities specified in Section 410(1)(b.1) and (c) of the Bank Act under the Fintech Amendments, namely:

• any activity that relates to the provision of financial services by the bank or any of its affiliates (other than prohibited insurance and leasing activities); and 
• collecting, manipulating and transmitting information, and designing, developing, manufacturing, selling and otherwise dealing with information technology, if those activities relate to activities engaged in by the bank or any of its affiliates, or the provision of financial services by any other entity,

(collectively, “Specified Non-Financial Activities”),

provided that the limits and conditions set out in the Proposed Regulations are complied with, as discussed below. This list of activities is broader than what is currently permitted under sections 410(1)(c) and (c.1) of the Bank Act.

Investment in Majority Financial Services Entities

The Fintech Amendments and Proposed Regulations would permit banks to invest in “Majority Financial Services Entities” under new subsection 468(2.1) of the Bank Act.

A “Majority Financial Services Entity” refers to an entity where 60% or more of its business consists of financial services activities set out under Section 409(2)(a) to (d) of the Bank Act, which are:

• providing any financial service;
• acting as a financial agent;
• providing investment counselling services and portfolio management services; and
• issuing payment, credit or charge cards and in cooperation with others including other financial institutions, operating a payment, credit or charge card plan

(collectively, “Financial Services Activities”),

provided that the limits and conditions set out in the Proposed Regulations and the Bank Act more generally are complied with, as discussed below. 

The 60% threshold is determined using the greatest of three measures: the proportion of the entity's (i) revenue, (ii) operating expenses or (iii) assets attributable to Financial Services Activities. An entity satisfies the test if it meets the 60% threshold under any one of the three measures.

The calculation is based on the entity's financial statements for the four most recently completed quarters or, if quarterly statements are not prepared, its most recent annual financial statements.

Because an entity qualifies as a Majority Financial Services Entity if the 60% threshold is met under any one of the revenue, operating expense or asset measures, the test may provide flexibility for early-stage and technology-intensive businesses. The remaining 40% of a Majority Financial Services Entity’s business is not restricted to Specified Non-Financial Activities.

A Majority Financial Services Entity’s status may change as its business evolves. Banks should therefore consider the test in transaction structuring and diligence, and obtain appropriate financial information rights and covenants governing material changes to the entity’s activities and business model.

As the Fintech Amendments remove the requirement to obtain approval to invest in entities that carry on information processing and information technology activities currently listed in section 410(1)(c) and (c.1) of the Bank Act, approval for an investment in a Majority Financial Services Entity would not be required merely because that entity carries on those types of activities. However, all other restrictions in the Bank Act with respect to investments would continue to apply to investments in Majority Financial Services Entities.

Investment in Entities Engaging in Non-Financial Activities

Given that banks would be permitted to directly undertake Specified Non-Financial Activities under amended section 410, banks would also be permitted to invest in FRFIs and other entities under Section 468(2) that carry on Specified Non-Financial Activities (“Entities Engaging in Non-Financial Activities”) without ministerial approval being required, provided that the limits and conditions set out in the Proposed Regulations and the Bank Act more generally are complied with, as discussed below.

As with investments in Majority Financial Services Entities, all other restrictions in the Bank Act with respect to investments would continue to apply to investments in Entities Engaging in Non-Financial Activities.

Limits and Conditions on Specified Non-Financial Activities and Investments

The Proposed Regulations set out a number of conditions and limitations that apply to banks directly carrying on Specified Non-Financial Activities, as well as investments by banks in Majority Financial Services Entities and Entities Engaging in Non-Financial Activities.

Aggregate Revenue and Capital Exposure Limits

The Proposed Regulations establish revenue and regulatory capital limits for banks performing Specified Non-Financial Services directly, and for subsidiaries of banks that are Majority Financial Services Entities and Entities Engaging in Non-Financial Activities, as summarized below:

• Aggregate annual revenue limit: The revenue limit applies to aggregate annual revenue derived from the following: (i) Specified Non-Financial Activities engaged in by the bank directly; (ii) activities other than Financial Services Activities engaged in by any subsidiaries of the bank that are Majority Financial Services Entities; and (iii) Specified Non-Financial Activities engaged in by any subsidiaries of the bank that are Entities Engaging in Non-Financial Activities.
  
  Banks may elect to calculate annual revenue using their consolidated revenue from the most recent financial year or the average of their consolidated revenue over the three most recent financial years.
   
• Aggregate capital exposure limit: The capital limit restricts aggregate financial exposure by banks to Majority Financial Services Entities and Entities Engaging in Non-Financial Activities (other than FRFIs).

The calculation of exposure includes the value of shares and other ownership interests held in these entities, as well as outstanding loans and guarantees provided to these entities by the bank and its subsidiaries.

Reporting requirements

Banks with equity of $12 billion or more must provide the following information to the Deputy Minister of Finance under the proposed framework:

• Transaction reports: Within 30 days after acquiring control of, or a substantial investment in, a Majority Financial Services Entity or an Entity Engaging in Non-Financial Activities, provide certain information detailed in the Proposed Regulations, including details of the transaction, ownership interests, the entity's business activities the relationship of the investment to the institution's strategic plans and business objectives.
• Annual reports: Within six months after the end of each financial year, provide certain information detailed in the Proposed Regulations, including information on Specified Non-Financial Activities engaged in by the bank and any Entities Engaging in Non-Financial Activities, as well as a description of the business of any Majority Financial Services Entity the bank had an investment in, along with the methodology used to calculate the 60% majority threshold and the applicable revenue and capital limits.

Information submitted is treated as confidential and relief from duplicative reporting is available where the same information has previously been provided under specified regulations.

Restrictions and consequences of non-compliance

Where a bank fails to satisfy the revenue or capital limit, its covered investments in any Majority Financial Services Entity or Entity Engaging in Non-Financial Activities are deemed temporary investments under the Bank Act. Similarly, where a Majority Financial Services Entity ceases to satisfy the 60% threshold, the investment in that entity is deemed a temporary investment.

The temporary-investment framework generally provides a two-year period in which the institution must divest or reduce its exposure, restructure the investment, bring it within another permitted investment category or otherwise address its status, subject to any applicable extension mechanism under the Bank Act.

The Proposed Regulations preserve restrictions on certain leasing activities, including businesses providing customers in Canada with temporary possession of personal property, such as motor vehicles, for purposes other than financing the customer's acquisition of that property.

Exemptions and transitional provisions

• Previously approved activities: Specified Non-Financial Activities carried on within the scope of approvals previously granted by the Minister of Finance are excluded from the new revenue and capital calculations and reporting requirements. The grandfathering is limited to the scope of the existing approval; activities outside that scope, including a material expansion of an approved activity, remain subject to the applicable conditions and may fall within the new framework.
• Certain information-processing activities: Certain activities, including qualifying payment-processing, payroll and accounting services, are also excluded from these calculations and reporting requirements. These are generally the activities that banks are currently permitted to undertake without approval under the current Information Processing Activities (Banks and Authorized Foreign Banks) Regulations.
• Two-year transition: Certain previously permitted activities and investments, including certain information-processing activities conducted outside Canada and investments in entities undertaking previously prescribed technology activities are exempt from the new calculations and reporting requirements for two years following the date the Proposed Regulations come into force.

The Proposed Regulations also repeal three existing regulations: the Information Processing Activities (Banks and Authorized Foreign Banks) Regulations, the Information Technology Activities (Banks) Regulations and the Information Technology Activities (Bank Holding Companies) Regulations.

When would the Proposed Regulations take effect?

The Proposed Regulations are not yet in force and were published for a 30-day public consultation period beginning October 17, 2026.

The Fintech Amendments would be brought into force by a separate order in council, with the Proposed Regulations taking effect in accordance with their commencement provision, subject to registration.

Affected institutions should assess their existing non-financial activities and related investments against the proposed framework and consider whether to submit comments before the consultation closes on November 16, 2026.

For more information about our financial institutions regulatory and Fintech expertise, please see our Financial Institutions Regulatory and Fintech pages.