The Reporter provides a monthly summary of Canadian federal legislative and regulatory developments of relevance to federally regulated financial institutions.
The Reporter provides a monthly summary of Canadian federal legislative and regulatory developments of relevance to federally regulated financial institutions. It does not address Canadian provincial financial services legislative and regulatory developments, although this information is tracked by BLG and can be provided on request. In addition, purely technical and administrative changes (such as changes to reporting forms) are not covered.
September 2016
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Institution |
Published |
Title and Brief Summary |
Status |
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OSFI [Applicable to banks and bank holding companies]
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Promotion of a "Comprehensive Credit Insurance" Policy by a Bank Comprehensive Credit Insurance (CCI) Policy provides insurance to a seller of goods or services against a loss incurred due to the non-payment for goods or services sold to a purchaser located in or outside Canada. OSFI concludes that CCI does not constitute "export credit insurance" and a bank may not, under the Insurance Business (Banks and Bank Holding Companies) Regulations, promote a CCI policy within its Canadian branches. |
Effective |
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BIS/Basel [Applicable to banks]
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The final Guidance reflects comments received on a consultative version published in December 2015. It identifies 19 of the total 29Basel Core Principles for Effective Banking Supervision where additional guidance is needed in the application of the Core Principles to the supervision of financial institutions engaged in serving the financially unserved and underserved. The Guidance also specifies the "Essential Criteria" and "Additional Criteria" associated with the Core Principles that have specific relevance to financial inclusion. |
Effective |
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OSFI [Applicable to federally regulated mortgage insurers] |
The planned changes to the regulatory capital framework for mortgage insurers will ensure that capital requirements keep pace with market conditions and more accurately reflect the underlying risks. The Advisory, along with Guideline A — Minimum Capital Test, will provide the framework within which the Superintendent will assess whether a mortgage insurer maintains adequate capital. The final advisory will be released in December 2016 and will replace the current Advisory: Interim Capital Requirements for Mortgage Insurance Companies. |
Comments were due on or before October 21, 2016
Effective January 1, 2017 |
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Finance |
Published September 16, 2016 |
Department of Finance Canada Launches Deposit Insurance Review Consultations Three broad policy objectives guide the review:
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Written comments should be forwarded by November 30, 2016 |
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Financial Action Task Force (FATF) |
Anti-money laundering and counter-terrorist financing measures: Mutual Evaluation Report his report provides a detailed assessment of the anti-money laundering and combating the financing of terrorism (AML/CFT) measures in place in Canada as at the date of the on-site visit (3-20 November 2015). It analyses the level of compliance with the FATF 40 Recommendations and the level of effectiveness of Canada's AML/CFT system, and provides recommendations on how the system could be strengthened. |
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BIS/Basel [Applicable to banks]
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The Basel Committee on Banking Supervision established a rigorous reporting process to regularly review the implications of the Basel III standards for banks and it has published the results of previous exercises since 2012. Data have been provided for a total of 228 banks, comprising 100 large internationally active banks ("Group 1 banks", defined as internationally active banks that have Tier 1 capital of more than €3 billion) and 128 "Group 2 banks" (ie representative of all other banks). The monitoring reports also collect bank data on Basel III's liquidity requirements. |
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OSFI [Applicable to federally regulated life insurance companies] |
Final version of the Life Insurance Capital Adequacy Test (LICAT) guideline Effective January 1, 2018, the LICAT guideline will replace the Minimum Continuing Capital and Surplus Requirements(MCCSR) guideline, in place since 1992. Under the LICAT, the amount of capital required to be held in the life industry, as a whole, is not expected to change significantly compared to that required under the MCCSR. However, the new framework may require individual institutions to evaluate their overall plans based on the business lines in which they are engaged, the risks they choose to take on and how these are managed. |
Life insurers are required to apply this guideline for reporting periods ending on or after January 1, 2018. |
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OSFI [Applicable to Banks, Bank Holding Companies, Federally regulated Trust and Loan Companies and Cooperative Retail Associations]
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OSFI releases for public consultation revisions to its Capital Adequacy Requirements Guideline (CAR) The revisions include clarifications on how the CAR Guideline will apply to federal credit unions, particularly with respect to qualifying capital instruments, deductions from capital and transitioning of non-qualifying instruments. The CAR Guideline also includes revisions to the treatment of insured residential mortgages. These revisions aim to emphasize that credit risk insurance is a risk mitigant (guarantee) that relies on the due diligence of a mortgage originator with respect to the requirements of a mortgage insurance contract. OSFI is also clarifying how we will exercise national discretion in the implementation of the countercyclical buffer, including the reciprocity of countercyclical buffers put in place in other jurisdictions. Finally, the revisions include OSFI's implementation of the equity investment in funds rules issued by the Basel Committee on Banking Supervision (BCBS). Revisions to the CAR Guideline are effective November 1, 2016 for institutions with an October 31st year end and January 1, 2017 for institutions with a December 31st year end. |
Comments were due October 18, 2016 |
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Finance
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Published (Gazette) – September 3, 2016 |
he objective of the amendment is to address concerns raised by the Standing Joint Committee for the Scrutiny of Regulations. The amendment clarifies the meaning of “regulator” in section 59 by replacing the term with a more functional description. |
Interested persons had until October 3, 2016 to make representations with respect to the proposed Regulations |
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Finance
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Published (Gazette)— September 3, 2016 |
Proposed By-law — Canadian Payments Association By-law No. 2 — Finance The objectives behind the repeal and replacement of By-law No. 2 are mainly to advance the CPA's modernization initiatives and allocate costs equitably and consistently to those who benefit from the CPA's existing and new services. The new By-law No. 2 would enable the CPA to build and maintain operations in the usual course of business and supplement the funding of significant new initiatives in furtherance of the CPA's legislative mandate and a modernized Canadian payments system. |
Interested persons had until October 3, 2016 to make representations with respect to the proposed Regulations |
Disclaimer
This Reporter is prepared as a service for our clients. It is not intended to be a complete statement of the law or an opinion on any subject. Although we endeavour to ensure its accuracy, no one should act upon it without a thorough examination of the law after the facts of a specific situation are considered.