Financial Sector Measures in the 2020 Fall Economic Statement
The 2020 federal Fall Economic Statement included a number of measures directed to the financial services sector, including (i) further strengthening Canada’s anti-money laundering and anti-terrorist financing regime, (ii) clarifying the statutory right of cancellation in the Financial Consumer Protection Framework of the Bank Act, (iii) financial stability measures, (iv) modernizing the federal unclaimed assets regime, and (v) clarifying the authority of the Bank of Canada to oversee payment exchanges.
Strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) Regime
The government proposes to make several amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the “PCMLTFA”). Firstly, it proposes to grant additional powers to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). Specifically, the amendments it proposes would enable FINTRAC to recover its compliance costs, clarify its ability to obtain additional information from reporting entities and expand the information it can disclose.
The government also proposes to bolster the AML/ATF regime in other ways, by strengthening criminal penalties and the registration framework for money services businesses under the PCMLTFA. The government also proposes to amend the PCMLTFA to regulate armoured car services for AML/ATF purposes, clarify certain definitions and disclosure recipients, and make other technical amendments.
Lastly, the government proposes to amend the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) to reduce administrative burden for financial institutions filing reports under this Act.
Clarity on the Right of Cancellation in the Financial Consumer Protection Framework
The government proposes to make technical amendments to the Financial Consumer Protection Framework in the Bank Act to clarify that the statutory right of cancellation provision does not extend to contracts between banks and large business clients.
Financial Stability Measures
The government proposes to introduce two important amendments to the Canada Deposit Insurance Corporation Act (the “CDIC Act”). Firstly, the government proposes to clarify the scope of, and support, the cross-border enforceability of the stay provisions applicable to eligible financial contracts. Secondly, the government proposes to clarify how investors, creditors and other participants may be compensated as a result of actions taken by financial sector authorities to sell, wind-down or restore to viability a failing bank.
The government also proposes to introduce amendments to the Payment Clearing and Settlement Act (the “PCSA”) to clarify how investors, creditors and other participants may be compensated as a result of actions taken by financial sector authorities to sell, wind-down or restore to viability a failing financial market infrastructure. We assume that these amendments will correspond to the amendments in the CDIC and provide much needed guidance on these issues.
Modernizing the Federal Unclaimed Assets Regime
The government proposes to modernize the federal unclaimed assets regime in two ways. It proposes to (i) implement amendments aimed at improving the current framework managed by the Bank of Canada, and (ii) expand its scope to include unclaimed balances from terminated federally regulated pension plans and foreign denominated bank accounts.
The Bank of Canada’s Authority to Oversee Payment Exchanges
The government proposes to clarify the Bank of Canada’s authority to oversee payment exchanges as clearing and settlement systems under the PCSA.
The changes proposed by the government appear aimed at providing more clarity and certainty regarding (i) the authority of regulatory bodies overseeing activities within the financial sector, and (ii) the operation of certain schemes within the financial sector. We look forward to the publication of these proposed amendments and hope to be able to advise on their impact in due course.