On Nov. 21, 2023, the Government of Canada released its 2023 Fall Economic Statement (FES 2023). Although FES 2023 contained no new draft legislation relevant to the government's oversight of the financial services sector, FES 2023 contained a number of important announcements for the sector described in greater detail below.

Please refer to Gowling WLG's complementary report Tax Measures Announced in 2023 Economic Statement for details on tax-related announcements contained in FES 2023.

Consumer-driven banking

The much-anticipated introduction of open banking in Canada features in FES 2023 with a new name: consumer-driven banking. The federal government will introduce legislation through Budget 2024 to establish a consumer-driven banking framework that would regulate access to financial data, permitting individuals and businesses to securely transfer their financial data to different financial service providers.

Concurrent with FES 2023, the government released a policy statement, which outlines the government's position on key objectives and core framework elements. These objectives and elements include governance, scope, accreditation, tiering, common rules, privacy, security, liability and technical standards.

Payments Canada membership

FES 2023 announced the government's plan to amend the Canadian Payments Act to modernize the membership framework for Payments Canada. Payments Canada is comprised of its member financial institutions that collectively own and operate Canada's payments infrastructure. These proposed changes to the Canadian Payments Act would expand membership eligibility in Payments Canada to payment service providers supervised by the Bank of Canada, credit union locals that are members of a credit union central and operators of designated clearing houses. The Bank of Canada is set to begin supervising payment service providers under the new regulatory regime established under the Retail Payment Activities Act in 2024. The modernization of Payments Canada membership is intended to promote lower transaction costs and faster, more secure payments for Canadians.

Anti-money laundering / Anti-terrorist financing

Federal anti-money laundering and anti-terrorist financing (AML/ATF) governance is implemented principally through the Canadian Criminal Code and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).

The PCMLTFA in particular has been subject to reform, as the government grapples with evolving trends in criminal activity. FES 2023 makes clear the PCMLTFA will continue to be the focus of significant government attention, with the government announcing, it intends to continue to close loopholes in the legislation, and also:

  • Empower Canada's primarily AML/ATF regulator, the Financial Transactions and Reports Analysis Centre (FINTRAC), to develop financial intelligence, and permit in select circumstances for FINTRAC to disclose its findings to law enforcement (including enforcement officers for environmental government departments);
  • Permit FINTRAC to identify foreign entities considered to pose AML/ATF risks;
  • Combat AML and fraud activity in real estate by making title insurers to be subject to the PCMLTFA, and requiring real estate representatives to identify unrepresented and third-parties to a transaction; and
  • Requiring "acquirers" (intermediaries who offer cash withdrawal services for white-label automated teller machines) to be compliant with the PCMLTFA; and

While not explicitly noted in FES 2023, it is also possible that further changes will be proposed and considered as a result of the recently concluded public consultation process, which considered input from stakeholders on how the PCMLTFA and related regime could be enhanced and improved.

In conjunction with changes to the PCMLTFA, the government has indicated it intends to update the Criminal Code to enhance the government's ability to (1) prosecute third-party money launders; (2) ensure production orders for financial data can more effectively apply to accounts relating to digital assets; and (3) modernize search, seizure and restraint of proceeds of crime provisions in the statute.

The Canada Border Services Agency will also have a new "Trade Transparency Unit" created within it, and its authority generally enhanced to allow it to more effectively respond to trade-based financial crimes.

Combatting security risks to the financial sector

The government appears focused on continuing its existing consultation and review processes in its efforts to modernize the governance framework for the financial sector.

The two key commitments emerging from FES 2023 are:

FES 2023 makes clear that further actions may be taken in the 2024 Budget bill as well, likely depending on how the ongoing processes bear out and what action items emerge.

Crypto-assets and the digitization of money

FES 2023 included an update on measures the government has been advancing to address risks posed to Canadians and Canada's financial system related to crypto-assets and the digitization of money. Stemming from work being done by the Basel Committee on Banking Supervision and the Financial Stability Board, the federal government in conjunction with the Office of the Superintendent of Financial Institutions has been furthering the initiative of requiring disclosures of crypto-asset exposures by federally regulated entities such as financial institutions and pension plans, encouraging these entities to publicly disclose their crypto-asset risks. The government has also completed targeted consultations with industry stakeholders to better understand how digital assets generally are evolving and their potential implication. Further, federal and provincial regulators have been participating in discussions with their counterparts at the international level, evidencing greater coordination towards a harmonized global approach to the oversight of the digital asset industry.