The federal government released alongside the 2024 federal budget a paper entitled Budget 2024: Canada’s Consumer-Driven Banking Framework (the “Paper”), setting out additional details on the federal government’s plan to legislate a Consumer-Driven Banking Framework (the “Framework”).

1. Role of the Financial Consumer Agency of Canada

The federal government announced its plan to expand the mandate of the Financial Consumer Agency of Canada (“FCAC”) to include the oversight of consumer-driven banking (also known as open banking). Additionally, it intends to amend the FCAC Act to create a new position, the Senior Deputy Commissioner of Consumer-Driven Banking, who will be responsible for consumer-driven banking.

The FCAC will supervise all participants in the Framework. Provincial credit unions and Crown corporations that act as banks will have the option to “opt-in” to governance, supervision, and participation in the Framework. Upon opting in, they will be subject to oversight by the new Senior Deputy Commissioner for Consumer-Driven Banking in respect of the Framework, as opposed to being subjected to broader oversight by the FCAC as a whole. The Paper also notes that “[p]rovinces and territories retain the authority to impose their own requirements on entities subject to their jurisdiction.”

2. Consumer-Driven Banking Legislation Being Introduced in 2024

The federal government announced that it intends to introduce two pieces of legislation to implement the Framework. The first piece of legislation, slated for spring 2024, will address key elements, such as governance, scope, criteria and process for the technical standard. Additional legislation will follow in fall 2024.

3. Accreditation Process and Criteria

The Framework will include an accreditation process, where entities can apply with the FCAC for accreditation. The FCAC will review such applications against criteria to be set out in the Framework and will publish and maintain a list of accredited participants. The Paper contemplates that accreditation applications will assess information about the organization itself (e.g. oversight arrangements and governance structures), its operational standards (e.g. security and privacy controls) as well as financial capacity. Accredited entities will be required to report certain information to the FCAC in order to maintain their accreditation.

The initial phase of the Framework will not include a concept of “tiered accreditation” (where certain participants may be subject to different criteria based on for example size or nature of access).

4. Scope of Framework

The federal government intends to mandate participation for banks that meet a specified threshold for retail volume, which will capture Canada’s largest retail banks. Other entities (such as Fintech companies and financial institutions that do not meet the specified retail volume) will not be required to participate but will be permitted to opt-in to the Framework.

The Paper also sets out the scope of data that will initially be in-scope of the Framework: 

• In-scope data: The Paper states that “In the initial phase, the scope of data that participants will be required to share at the request of a consumer will initially include data related to chequing and savings accounts operations, investment products available through their online portals, and lending products, such as credit cards, lines of credit, and mortgages.”
• Out of scope data: The Paper states that “[d][ata that has been materially enhanced by a participant to offer significant additional value or insight will be excluded from scope.” and that “[the existing prohibition on the sharing by banks of customer information for the business of insurance will be maintained.”

The federal government stated that it “may consider an expansion of the scope at a later date, to include additional data, entities, entry processes (e.g., tiered accreditation), and functionalities (such as the ability to initiate payments).”

5. Framework Access Parameters

The Framework provides for the following access parameters in respect of consumer-permissioned data sharing requests:

• Reciprocal access: Participants in the framework will be required to provide reciprocal access to in-scope data.
• No charge for access: In-scope data will be required to be shared in “unaltered, original format, free of charge.”
• Common rules: All participants will be required to comply with common rules in the Framework that will “address consumer protection interests, privacy, liability, security, national security, and integrity obligations.” The Paper states that there will be an effort to ensure such rules align with and complement existing legislation, including the Financial Consumer Protection Framework within the Bank Act.

6. Liability Regime

The Paper states that the Framework legislation will address liability by creating a statutory relationship between participants when they enter the Framework, eliminating the need for contracts between participants. The liability structure is to be “based on the principle that liability moves with the data and rests with the party at-fault if anything goes wrong”, with consumers not to be held liable for financial losses incurred as a result of sharing their financial data within the Consumer-Driven Banking Framework.

Participants in the Framework will also be required to put in place policies and procedures for complaint handling and redress.

7. Single Technical Standard

The Framework will mandate the use of a single technical standard, and will set out the principles and processes to identify such technical standard, with the aim “that the standard is fair, open, accessible, and able to meet key public policy objectives for the Consumer-Driven Banking Framework, including interoperability with standards used in other jurisdictions.”

The Minister of Finance will have the authority to identify and revoke a technical standard, and the FCAC will have the authority to supervise the technical standard body to ensure compliance with the Framework.

8. Privacy and Consent Management

While participants will remain obligated to comply with existing privacy legislation, the Framework will include additional rules regarding how consents must be provided, revoked and otherwise managed within the Framework. Participants will be required to provide consent dashboards that provides consumers with “real-time knowledge about who has access to their data and to maintain control over the type of data they share, the accounts from which it is being collected, the length of consents, as well as the ability to revoke it”. In particular, it is noted that participants will be required to re-confirm consents at specified intervals (every 12 months) or following certain events. 

9. Security Requirements and Certifications

All participants will be required to adhere to specified security requirements in connection with the protection of consumers’ data, which will cover “all the people, processes, technology and infrastructure that interact with in-scope data”. The forthcoming legislation will establish these mandatory security requirements that all participants must adhere to, and participants will have ongoing reporting obligations that will be overseen by the FCAC (including audits). As noted above, the security controls of each participant will be assessed as part of the accreditation process managed by the FCAC.

Further, it is expected that each participant will be required to obtain and maintain a security certification as it is noted in the Paper that the Department of Finance will be engaging with industry, as well as other regulators, governments and stakeholders, to finalize a recommendation on “which security certifications will be mandated and the extent of the reporting obligations”.

The 2024 federal budget (the “Budget”) includes a number of measures directed to the financial services sector, including: (i) developments in respect of a Consumer-Driven Banking Framework, which will be overseen by the Financial Consumer Agency of Canada (“FCAC”), (ii) a number of measures in respect of affordability of financial services, including limits on non-sufficient fees (“NSF Fees”) charged by banks and additional consumer protection measures in respect of high-interest lending and criminal rate of interest enforcement, (iii) updates to financial crime legislation (iv) tax measures in respect of crypto-asset transactions, (v) proposed deposit insurance consultations and (v) a number of proposed amendments to the Bank Act, the Insurance Companies Act, and the Trust and Loans Companies Act (the “Financial Institutions Statutes”).

1. Consumer-Driven Banking (Open Banking)

The Budget, along with the companion document - Budget 2024: Canada’s Consumer-Driven Banking Framework, sets out the federal government’s plans to legislate a framework for consumer-driven banking (also known as open banking) in Canada in the coming months.

As summarized in the Budget, the objective of open banking is to provide a mechanism for individuals and businesses to securely transfer their financial data between various service providers, including banks, credit unions and Fintechs. While there have been numerous efforts made by the government to advance open banking in Canada over the past number of years, this Budget signals a reinvigorated push by the federal government to legislate an open banking regime.

Key takeaways on the federal government’s plan for consumer-driven banking/ open banking from the budget include the following:

• Spring 2024 – Legislation Part 1: The federal government intends to introduce the first of two pieces of legislation to implement the open banking framework in spring 2024. This initial legislation will cover key elements such as governance (oversight and management of the framework), scope (types of data, functionalities the system will provide, participants, etc.) and the criteria and process for the technical standard that will be adopted.
• Fall 2024 – Legislation Part 2: The remaining elements of the framework will be legislated in fall 2024, which will include accreditation (requirements and process for participating in the open banking regime) and common rules governing privacy/liability/security/etc.
• FCAC Oversight and Administration: The FCAC will be tasked with the oversight and administration of the open banking framework, including evaluating accreditation applications from participants, publishing a registry of participants and overseeing reporting and other compliance obligations of participants. The Budget includes funding for the FCAC to support preparation for the new responsibilities, although it is noted that the intention is that FCAC oversight will operate on a cost recovery model once the framework is operating.

2. Measures in Respect of Affordability of Financial Services

Limits on NSF Fees

The federal government announced its intent to cap non-sufficient fees (“NSFFees”) charged by banks to $10 per instance and to release NSF fee regulations in the coming months. These regulations will also (i) require banks to alert consumers that they are about to be charged an NSF fee; (ii) require banks to provide a grace period to deposit additional funds to avoid the NSF fee; (iii) prohibit multiple NSF fees when the same transaction reoccurs; (iv) restrict the number of NSF fees that may be charged to one in every 72-hour period; and (v) prohibit NSF fees for small overdrawn amounts under $10.

Enhancements to No Fee and Low-Cost Bank Accounts

The Budget states that the FCAC is in negotiations with banks to secure enhanced agreements to offer modernized no fee bank accounts with expanded eligibility as well as modernized low-fee ($4 per month) bank accounts.

Criminal Rate of Interest Developments

Following up on recent changes to the criminal rate of interest in the Criminal Code, the federal government announced that it now proposes to amend s. 347 of the Criminal Code to add a prohibition against offering or advertising credit at a criminal rate of interest, and to remove the requirement in s. 347(7) to obtain Attorney General consent to commence proceedings, in order to facilitate additional enforcement of the criminal rate of interest provisions.

Consumer Protection Measures in Respect of Consumer Lending

The federal government announced that it intends to work with provincial and territorial governments to enhance consumer protection measures in respect of consumer lending, focusing in particular on high-cost loans and payday loans, including, if necessary, by enacting federal legislative measures. Additional consumer protections being sought include:

• capping the cost of optional insurance products for high-cost loans and payday loans;
• additional disclosure requirements and regulation of marketing and other market practices in respect of high-cost and payday loans;
• increasing regulation and enforcement in respect of lead generators; and
• improving monitoring and data collection practices in the high-cost loan and payday loan market.

Amendments to the Canada Mortgage Charter

The federal government announced that it is intending to update the Canadian Mortgage Charter “to provide further support to Canadians facing mortgage hardship”, including

• permitting consumers to use their rent payment history for mortgage applications and to improve their credit score;
• expanding mortgage amortization to 30 years for first-time home buyers purchasing new builds; and,
• requiring lenders to proactively contact borrowers and to provide more information in certain cases, such as at mortgage renewal.

More generally, the federal government announced that it “was calling on banks, [F]intechs, and credit bureaus to prioritize launching tools to allow renters to opt-in to reporting their rent payment history to credit bureaus […] to strengthen their credit scores”.

Expanding Access to Alternative Mortgage Financing Products, including Halal Mortgages

The federal government announced that it is looking at additional measures to “expand access to alternative financing products, like halal mortgages. This could include changes in the tax treatment of these products or a new regulatory sandbox for financial service providers, while ensuring adequate consumer protections are in place.” It also announced that consultations are in process and an update will be provided in the 2024 Fall Economic Statement.

Mortgage Income Verification Tool

The federal government announced that it intends to consult with the mortgage industry on making available a tool through the Canada Revenue Agency to verify borrower income for mortgages.

3. Financial Crime Developments

The Budget states that the federal government intends to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (“PCMLTFA”) to, among other things:

• enhance information sharing between reporting entities in respect of money laundering, terrorist financing, and sanctions evasion, while maintaining privacy protections for personal information. This would include an oversight role for the Office of the Privacy Commissioner;
• permit the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”) to disclose financial intelligence to provincial and territorial civil forfeiture offices and, Immigration, Refugees and Citizenship Canada;
• expand the scope of the PCMLTFA to cover factoring companies, cheque cashing businesses, and leasing and finance companies; and
• allow FINTRAC to publicize more information around violations of obligations under the PCMLTFA when issuing administrative monetary penalties.

In addition, the federal government intends to amend the Criminal Code to:

• allow courts to issue an order to require a financial institution to keep an account open to assist in the investigation of a suspected criminal offence; and,
• allow courts to issue a repeating production order to authorize law enforcement to obtain ongoing, specified information on activity in an account or multiple accounts connected to a person of interest in a criminal investigation.

The federal government also announced additional financial crime related funding:

• for FINTRAC “to enhance its cyber resiliency and ensure the implementation of additional data security safeguards over the long-term“;
• to help finalize the design and legal framework of the Canada Financial Crimes Agency (“CFCA”) in 2024-2025. Once formed, the CFCA will be the new lead enforcement agency against financial crime; and
• for the Canada Border Services to help combat trade-based financial crime, including to assist with the creation of its Trade Transparency Unit.

4. Crypto-Asset Taxation Updates

Crypto-Asset Reporting Framework

Further to the joint statement released by Canada and other participating jurisdictions in November of 2023, Budget 2024 proposes to implement the framework of the Organisation for Economic Co-Operation and Development (OECD) for the automatic exchange of tax information relating to crypto-asset transactions, referred to as the Crypto-Asset Reporting Framework (“CARF”), in Canada.

The proposed framework will require certain crypto-asset service providers that are resident or carry on business in Canada and provide services in respect of crypto-asset exchange transactions to collect and report information on an annual basis in respect of their customers and crypto-assets. Crypto-asset service providers subject to these reporting rules will include crypto-exchanges, crypto-asset brokers and dealers, and operators of crypto-asset automated teller machines.

Information required to be reported in respect of crypto-assets will include the annual value of:

• exchanges between crypto-assets and fiat currencies;
• exchanges of crypto-assets for other crypto-assets; and
• transfers of crypto-assets (including certain transfers in respect of which the crypto-asset service provider acts as a payment processor for a merchant, where crypto-assets are exchanged for goods or services from the merchant with a value in excess of US$50,000).

Reportable crypto-assets will exclude central bank digital currencies and certain specified electronic money products (e.g., in respect of fiat currencies), which will instead be subject to the Common Reporting Standard (“CRS”).

Information required to be collected and reported in respect of customers (including Canadian and non-Canadian residents) will include each customer's name, address, date of birth, jurisdiction of residence and taxpayer identification number. This information will also need to be provided in respect of the individuals who control customers that are corporations or other entities.

Common Reporting Standard

Budget 2024 will also introduce certain related changes to CRS, including to expand the scope of CRS to central bank digital currencies and certain specified electronic money products. The Government indicates that there will also be amendments to “ensure effective coordination between the CRS and the CARF and limit instances of duplicative reporting between the two frameworks” as well as to “require that additional information be reported in respect of financial accounts and account holders”. For example, based on the OECD’s commentary, it is reasonable to expect that the definition of “investment entity” in subsection 270(1) of the Income Tax Act will be amended to include crypto-assets within the categories of investments that would bring an entity within the scope of the CRS. As a further example, a new category of “non-reporting financial institutions”, defined in subsection 270(1), may be created to ensure that registered charities do not have an obligation to report under the CRS.

5. Deposit Insurance Framework Review

The federal government announced its intention to undertake a review of the federal deposit insurance framework, starting in 2024, including consultations later in 2024.

6. Amendments to Financial Institutions Statutes

Diversity Disclosure

The federal government announced that it plans to amend the Financial Institutions Statutes to adopt similar diversity model disclosure requirements in respect of boards and senior management as those under the Canada Business Corporations Act.

Notice-and-Access/ Electronic Delivery of Governance Materials

The federal government announced that it plans to amend the Financial Institutions Statutes to introduce a “notice-and-access” method of delivery of governance documents.

Extending the Sunset Date of Financial Institutions Statutes

The federal government proposes amendments to the Financial Institutions Statutes to extend their respective sunset dates from June 30, 2025 to June 30, 2026.

The 2023 federal budget (the “Budget”) includes a number of measures directed to the financial services sector, including (i) measures lowering the criminal rate of interest, (ii) financial consumer protection measures, including in respect of bank fees and credit card interchange fees, (iii) anti-money laundering/anti-terrorist financing (“AML/ATF”) measures, (iv) proposed amendments to federal financial sector legislation, and (v) measures intended to address crypto-asset risks.

1. Lowering of Criminal Rate of Interest

The federal government intends to put forward amendments to the Criminal Code to lower the criminal rate of interest from the current rate to 35% annual percentage rate (APR), and to conduct consultations on whether the criminal rate of interest should be further lowered. This is a significant change which could have widespread impact on the Canadian loan industry.

In addition, the government announced that it intends to modify the current Criminal Code payday lending exemption to require payday lenders to charge no more than $14 per $100 borrowed. It will also launch consultations on additional revisions to the Criminal Code’s payday lending exemption.

2. Financial Consumer Protection Measures

The budget included several measures to further strengthen the protection of Canadian financial consumers. 

Bank Fees

The government announced that it will work with regulatory authorities to continue to ensure the transparency of bank business practices, particularly as they relate to the transparency of prices charged to consumers.

Following the lead of the US Government, the Budget included plans to amend the Bank Act and the Financial Consumer Agency of Canada Act to buttress the rights of consumers when dealing with their banks.

Complaints Handling

Following the publication of its Consultation Document: Strengthening Canada's External Complaint Handling System in 2021 and the Financial Consumer Agency of Canada’s (“FCAC”) industry review on The Operations of External Complaints Bodies, the government is proposing to introduce legislative measures to designate a single non-profit external complaint body for banks which will be selected through a FCAC-led process.

Code of Conduct to Protect Canadians with Existing Mortgages

Citing the impact of elevated interest rates on Canadian mortgage holders and its commitment to helping Canadians stay in their homes, the government announced that it will be taking steps to ensure that federally-regulated financial institutions (“FRFIs”) provide existing mortgage holders with fair and equitable access to relief measures which include extended amortizations periods (even beyond 25 years), adjusted payment schedules and the authorization of lump-sum payments.

In connection with this initiative, the FCAC recently issued a guideline to ensure that mortgage holders who are facing hardship are not subjected to unnecessary penalties, internal bank fees or interest charges. For more information on the guideline please consult our recent blogpost.

3. Credit Card Transaction Fees

The Budget announced a commitment by Visa and MasterCard to lower credit card transaction fees for small businesses, without impacting the reward points offered by Canada’s large banks and enjoyed by consumers. The announcement specified that the commitment would see lower fees of up to 27% for over 90% of card-accepting businesses, which should save them an estimated $1 billion over five years. The government expects payment processors to pass on these reductions to small businesses.

The government also expects other credit card companies to follow suit and lower the transaction fees they charge small businesses. 

More details, including eligibility criteria, should be available in the coming weeks.

4. Modernization Amendments to Federal Financial Sector Legislation: Addressing Foreign Interference and Sector Integrity and Security

The Budget included a reference to the government’s intention to amend the Bank Act, the Insurance Companies Act, the Trust and Loan Companies Act and the Officeof the Superintendent of Financial Institutions Act to “modernize the federal financial framework” to address developing risks to this sector.

Notably, the federal government proposes to introduce legislation to:

• Expand the mandate of the Office of the Superintendent of Financial Institutions (“OSFI”) to include supervision of FRFIs to assess whether they have “adequate” policies and procedures to protect themselves “against threats to their integrity and security” including, in particular, protection against “foreign interference”;
• Expand the range of circumstances and situations where OSFI can take control of a FRFI to include situations where “the integrity and security” of the institution is at risk, where all shareholders have been precluded from exercising their voting rights, or where there are national security risks; and
• Expand the existing authority for the Superintendent of Financial Institutions (Canada) to issue a direction of compliance to include acts that “threaten…the integrity and security” of the FRFI.

The Budget states that the federal government may also amend the Canada Deposit Insurance Corporation Act “to provide expanded authorities to increase deposit insurance and related measures in the event of a market disruption.”

5. Diversity Disclosure Requirements

As part of the Budget, the government proposes to introduce legislation to amend the Bank Act, the Insurance Companies Act, and the Trust and Loan Companies Act that will incorporate the principles of the diversity disclosure requirements included in the Canada Business Corporations Act (“CBCA”).

The CBCA requires that certain federally-incorporated publicly traded companies disclose to their shareholders and to Corporations Canada information related to the diversity of their boards of directors and senior management (see our prior blog post here). In this context, “senior management” includes:

• board chairs and vice-chairs;
• president;
• chief executive officer or chief financial officer;
• a vice-president in charge of a principal business unit, division or function, including sales, finance or production; and
• anyone who performs a policy-making function within the corporation.

Under the CBCA, while corporations have latitude to disclose information in respect of any other groups they believe contribute to diversity of their boards or senior management teams, they are required to report on the representation of 4 designated groups defined in the Employment Equity Act, on their board of directors and senior management teams:

• women;
• Indigenous peoples (First Nations, Inuit and Métis);
• persons with disabilities; and
• members of visible minorities.

Under the CBCA, the corporation is required either to disclose information about its policies and targets in respect of these groups, or explain why it does not have a policy and/or targets. Information to be disclosed includes the following:

• whether the corporation has adopted term limits or other mechanisms of board renewal;
• whether it has a written policy relating to the identification and nomination of directors from the designated groups and, if so, a description of the policy;
• whether and, if so, how the board or nominating committee considers diversity on the board in identifying and nominating candidates for election or re-election to the board;
• whether and, if so, how the corporation considers diversity when making senior management appointments;
• whether the corporation has targets for representation on the board and among senior management for each of the designated groups and, if so, its progress in achieving those targets; and
• the number and percentage of directors from each of the designated groups on the board and among senior management.

We expect that similar requirements will apply to FRFIs.

6. Virtual Meetings

The government has also proposed to introduce legislation that would permit virtual-only meetings for FRFIs, and allow for the introduction of conditions to ensure participation. While virtual-only meetings were exceedingly rare prior to the COVID-19 pandemic, advances in technology and the smooth functioning of these meetings has changed the regulatory view of requirements for in-person meetings.

We expect that this legislation or enabling regulations will include requirements for, among other things, facility for meeting participants to vote.

7. AML/ATF Measures

Parliamentary Review and Public Consultations

In the wake of the Cullen Commission, the federal government intends to launch a parliamentary review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the “PCMLTFA”) in 2023, which will include a public consultation (the “2023 AML/ATF Consultations”) which will review the potential need for additional asset seizures measures (such as unexplained wealth orders), the need for measures to support investigations and prosecutions, the need for measures to enhance information sharing, and a consideration of the recommendations from the Cullen Commission.

The government has also pledged in the Budget to review the mandate of the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”) to determine whether it should be expanded to counter evasion of Canadian sanctions, and to provide an update in the anticipated 2023 fall economic update. The government will also review whether FINTRAC’s mandate should be expanded to include financing of threats to Canada’s national and economic security; we expect that this will be a part of the parliamentary review.

AML/ATF Legislative Amendments

The federal government plans to introduce a number of amendments to the Criminal Code and the PCMLTFA to provide law enforcement and FINTRAC with additional tools to combat money laundering and terrorist financing, including measures to:

• Provide law enforcement the ability to freeze and seize virtual assets with suspected links to crime;
• Improve financial intelligence information sharing between law enforcement and the Canada Revenue Agency (“CRA”), and between law enforcement and FINTRAC;
• Introduce a new offence for structuring financial transactions to avoid FINTRAC reporting;
• Strengthen the registration framework, including through criminal record checks, for currency dealers and other money services businesses (“MSBs”) to prevent their abuse;
• Criminalize the operation of unregistered MSBs;
• Establish powers for FINTRAC to disseminate strategic analysis related to the financing of threats to the safety of Canada;
• Provide whistleblowing protections for employees who report information to FINTRAC;
• Broaden the use of non-compliance reports by FINTRAC in criminal investigations; and
• Set up obligations for the financial sector to report sanctions-related information to FINTRAC.

The federal government also proposes to make amendments to PCMLTFA to require FINTRAC to disclose information to the Minister of Foreign Affairs, in certain circumstances.

In addition, the federal government announced plans to:

• Provide new powers under the PCMLTFA to allow the federal Minister of Finance to impose enhanced due diligence requirements to “protect Canada’s financial system from the financing of national security threats”, and allow the Director of FINTRAC to share intelligence with the federal Minister of Finance to help assess financial integrity risks or national security risks posed by financial entities;
• Improve sharing of compliance information among FINTRAC, OSFI, and the federal Minister of Finance; and
• Designate OSFI as a recipient of FINTRAC reports relating to threats to Canada’s security, where this is relevant to OSFI’s responsibilities for financial institution oversight.

Additional amendments to the PCMLTFA and/or the Criminal Code may also be put forward following the 2023 AML/ATF Consultations.

Canada Financial Crimes Agency

As previously announced in the 2022 Budget, the federal government intends to create a new Canada Financial Crimes Agency (“CFCA”), which will become the lead enforcement agency against financial crime. The Budget states that further details on the structure and mandate of this new agency will be provided in the 2023 fall economic update.

Federal Beneficial Ownership Registry

The Budget references the recent introduction of Bill C-42, which seeks to put in place the necessary measures to implement a publicly accessible federal beneficial ownership registry. Bill C-42 includes amendments to the CBCA and the PCMLTFA.

In addition, the Budget notes that the “federal government will continue calling upon provincial and territorial governments to advance a national approach to beneficial ownership transparency to strengthen the fight against money laundering, tax evasion, and terrorist financing.”

For details on sanctions and international trade measures proposed in the Budget, please see our separate blogpost here.

8. Crypto-Asset Exposure Disclosure Requirements

The Budget includes a number of measures focused on the crypto-asset sector:

• OSFI will consult with FRFIs on potentially issuing guidelines requiring FRFIs to disclose their crypto-asset exposures;
• OSFI will require federally regulated pension funds to disclose their crypto-asset exposures; and
• The federal government also intends to work with the provinces and territories to raise the need for potential crypto-asset or related activities disclosure requirements for Canada’s largest pension plans.

The federal government also continues its review of the digitalization of money (which was announced in the 2022 budget), and will put forward additional measures in respect of crypto-assets further to such review. Further details on these measures will be announced in the 2023 fall economic update.

9. Disaster Insurance

The Budget introduced two insurance-related measures that relate to climate change, based on a need for an improved federal disaster insurance program that reflects the reality that natural disasters are difficult to insure against. 

Accordingly, the government proposes to work with the insurance industry to protect Canadians from costs related to disaster recovery and making insurance affordable. In the Budget, the federal government announced its intention to launch, with provinces and territories, a new approach to address gaps in natural disaster protection and to help Canadians access affordable insurance. In addition, the government proposes to:

• Provide $31.7M over three years to Public Safety Canada and the Canada Mortgage and Housing Corporation to work with the Department of Finance to set up a low-cost flood insurance program, aimed at protecting those at high risk of flooding and without access to adequate insurance. This would include both reinsurance through a federal Crown corporation and a separate insurance subsidy program for private insurance. Important discussions will need to take place regarding federal-provincial participation, cost-sharing and risk mitigation; and
• Have the Department of Finance and Public Safety Canada engage with industry on solutions to earthquake insurance and other insurance market challenges that relate to climate.

McCarthy Tetrault’s Expertise

By leveraging our deep industry expertise and experience, we help our clients navigate Canada’s complex, highly regulated financial institutions environment to achieve their business goals. Please contact the authors or any other member of our Financial Institutions Regulatory Matters group if you have any questions or for assistance.

The federal announced in its fall economic statement Building an Economy That Works for Everyone (“the Fall Economic Statement”) that it intended to “enter into negotiations” with payment card networks, financial institutions, acquirers, payment processors and businesses to lower credit card transactions fees for small businesses while seeking to protect “existing reward points for consumers”. 

Draft legislative proposals to the Payment Card Networks Act were also concurrently published, providing for, among other things, regulation-making powers to regulate fees (including how they are determined, the maximum fee amounts and the range of fees permitted), fee disclosure requirements and fee change notice requirements. In the Fall Economic Statement, the federal government stated that, “[s]hould the industry not come to an agreed solution in the months to come, the government will introduce this legislation at the earliest possible opportunity in the new year and move forward on regulating credit card transaction fees.”

This development follows a series of voluntary commitments by payment card networks to lower credit card interchange fees, a number of previous budget announcements on lowering credit card fees, as well as a recent settlement in October 2022 of a long-standing class-action lawsuits against Visa and MasterCard and bank credit card issuers,[1] following which Visa and Mastercard modified their rules to permit merchants to pass down surcharges for credit card payments to customers directly.

For more information about our firm’s Fintech expertise, please see our Fintech group’s page.

[1] See Bancroft-Snell v. Visa Canada Corporation, 2019 ONCA 822 (CanLII); Coburn and Watson’s Metropolitan Home, 2019 BCCA 308 (CanLII); 9085-4886 Québec Inc. c. Visa Canada Corporation, 2018 QCCS 4872 (CanLII); Macaronies Hair Club and Laser Center Inc v Bank of Montreal, 2021 ABCA 40 (CanLII).

On November 3, 2022, Deputy Prime Minister and Finance Minister Chrystia Freeland delivered the fall economic statement Building an Economy That Works for Everyone (“the Economic Statement”), which, among other developments, outlined the federal government’s broader plans to understand digital currencies and their effect on the Canadian financial system. The federal government expressed the view that the country’s framework for regulating its financial system must “keep pace” with developments in digital assets and cryptocurrencies, and highlighted their recent use in financing illicit activity and circumventing international sanctions.

Targeted consultations with stakeholders on digital currencies, including cryptocurrencies, stablecoins and central bank digital currencies (CBDCs), launched on November 3, 2022. These consultations will form part of the government’s intention to set in motion a financial sector legislative review targeting the digitalization of money and maintaining stability and security in the country’s financial system, previously announced as part of the 2022 Budget in April.

Stakeholders can also send comments directly to [email protected].

For more information about our firm’s Fintech expertise, please see our Fintech group’s page.