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. In addition, purely technical and administrative changes (such as changes to reporting forms) are not covered.
June 2023
Published |
Title and brief summary |
Status |
Office of the Superintendent of Financial Institutions (OSFI) |
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June 30, 2023 |
Technology and Cyber Incident Reporting OSFI has issued a draft advisory on technology and cyber incident reporting, which describes its expectations for reporting technology and cyber security incidents that affect federally regulated private pension plans (FRPPs). The advisory links to a draft Technology and Cyber Incident Report, and provides:
It notes that failure to report incidents as outlined in the advisory may increase a plan’s rating and result in additional supervisory oversight. |
Comments are due Sept. 30, 2023 |
June 28, 2023 |
OSFI Issues Draft Climate Risk Returns for Consultation OSFI, in partnership with the Bank of Canada and Canada Deposit Insurance Corporation, has published draft Climate Risk Returns for Federally Regulated Financial Institutions (FRFIs) for consultation. They consist of two documents:
The returns will collect climate-related emissions and exposure data directly from FRFIs, informing OSFI’s policy development, regulation, and prudential supervision as it pertains to climate risk management. |
Comments are due Sept. 30, 2023 |
June 26, 2023 |
Statement from the Superintendent on Royal Assent of Bill C-47 “On June 22, 2023, Parliament passed Bill C-47, the Budget Implementation Act (BIA), which expands the OSFI’s mandate. These changes will enhance the strong oversight of FRFIs that underpins a sound and stable Canadian financial system. Starting January 1, 2024, FRFIs will be required to have and adhere to adequate policies and procedures to protect themselves from threats to their integrity and security, including foreign interference. OSFI will examine each FRFI’s policies and procedures to determine if they are adequate and will annually report on these examinations to the Minister of Finance.” |
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June 9, 2023 |
Life Insurance Capital Adequacy Test 2023 – Adjustments and clarifications OSFI has published adjustments and clarifications to the Life Insurance Capital Adequacy Test (LICAT) 2023 guideline and associated instructions and forms. The adjustments and clarifications are with respect to the following:
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June 1, 2023 |
OSFI Launches Public Consultations on Solo Capital Requirements and Solo Total Loss Absorbing Capacity (TLAC) Requirements OSFI has released two draft frameworks for open public consultation:
Solo capital, or solo TLAC in the case of D-SIBs, is a measure of the loss-absorbing capacity available to the stand-alone, or solo, parent bank or operating life insurer. While OSFI’s Total Loss Absorbing Capacity (TLAC) Guideline applicable to D-SIBs and its Life Insurance Capital Adequacy Test (LICAT) Guideline applicable to Life IAIGs measure loss-absorbing capacity on a group consolidated basis, solo requirements focus on the loss-absorbing capacity of the parent only. When the parent of an internationally active financial group is adequately capitalized on a stand-alone basis, its capacity to protect the interests of its depositors, policyholders, and creditors from losses in times of stress is greatly enhanced. In addition, such capitalization allows the parent to function as a source of strength to its subsidiaries and foreign branches. These outcomes are aligned with OSFI’s mandate of protecting the interests of depositors, policyholders, and creditors. The Framework itself is considered by OSFI to be consistent with its international commitments pertaining to the regulation and supervision of financial institutions. |
Comments were due June 30, 2023 |
May 10, 2023 |
Liquidity Adequacy Requirements (LAR) Guideline Review for Wholesale Funding Sources with Retail-like Characteristics OSFI is launching a review of the liquidity treatment provided in the Liquidity Adequacy Requirements (LAR) Guideline for wholesale funding sources with retail-like characteristics, such as high-interest savings account exchange traded funds (HISA ETFs). In a rising rate environment, these products have seen significant growth as they aim to mimic traditional savings accounts through an ETF structure while offering higher yields. The higher yield is supplemented by the product’s liquidity, as clients’ withdrawals are usually not subject to restrictions. This review aims to assess the need for new wholesale funding categories to appropriately reflect the risks of such retail-like wholesale products. OSFI will also analyze any similar types of products with retail characteristics, but which banks access via a financial institution’s intermediation. OSFI requests feedback about the liquidity treatment of wholesale funding products with retail-like characteristics. |
Comments due June 21, 2023 |
Bank of Canada |
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May 8, 2023 |
Bank of Canada Launches Public Consultations on a Digital Dollar The Bank of Canada launched an online consultation on the features that could be included in a digital dollar. The Bank is interested in hearing about the following with respect to a digital dollar:
The Bank will publish a report summarizing the consultation later in 2023. For BLG’s previous insights on the digital dollar, please see our team’s three-part series:
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Comments were due June 19, 2023 |
Finance Canada |
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June 9, 2023 |
Consultation on Strengthening Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime Finance Canada has launched a public consultation to examine ways to improve Canada's Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) Regime. The consultation paper is intended to support the 2023 Parliamentary Review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and consult on potential policy measures, some of which may be considered for future legislative and regulatory amendments, including to the PCMLTFA and the Criminal Code. Part I of the paper provides an overview of Canada's AML/ATF Regime and government efforts to combat money laundering and terrorist financing. Part II explores ways to enhance the operational effectiveness of the AML/ATF Regime to investigate and prosecute money laundering and terrorist financing and deprive criminals of the proceeds of crime. Part III considers the legislative and regulatory framework of the PCMLTFA. Part IV discusses national and economic security. The paper also contains an annex of further technical proposals to modernize and enhance the AML/ATF legislative and regulatory framework. |
Comments are due Aug. 1, 2023 |
Financial Action Task Force (FATF) |
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June 29, 2023 |
Public Consultation on the Revision of Recommendation 8 and its Interpretive Note FATF has proposed a draft amendment text of Recommendation 8 of the FATF Standards and its Interpretive Note (R.8/INR.8), which is intended to protect non-profit organizations (NPOs) from possible terrorist financing abuse. One question of particular interest is that examples of measures provided in a paragraph of the Interpretative Note that countries can apply to NPOs according to their terrorist financing risk exposure may have been perceived by some countries or jurisdictions as compulsory. The draft amendment text attempts to remedy this, amongst other issues. |
Comments are due Aug. 18, 2023 |
June 29, 2023 |
Public Consultation on the FATF Best Practice Paper to Combat the Abuse of Non Profit Organisations Undertaken in parallel with the Public Consultation on the Revision of Recommendation 8 (R.8) and its Interpretive Note, FATF has proposed an updated FATF Best Practice Paper to Combat the Abuse of NPOs (non-profit organizations) for consultation. FATF is particularly interested in input with respect to:
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Comments are due Aug. 18, 2023 |
Financial Stability Board (FSB) |
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June 22, 2023 |
The FSB has responded to concerns over the risks related to outsourcing and third-party service relationships, which have grown in recent years as part of the digitalisation of the financial services sector, with this consultative document. Enhancing Third-Party Risk Management and Oversight is a toolkit intended to:
To facilitate this, the toolkit includes:
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Comments are due Aug. 22, 2023 |
International Association of Insurance Supervisors (IAIS) |
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June 23, 2023 |
Public Consultation on Insurance Capital Standard as a Prescribed Capital Requirement IAIS has issued a consultation document seeking feedback with respect to the global Insurance Capital Standard (ICS) ahead of its adoption as a group Prescribed Capital Requirement (PCR) for Internationally Active Insurance Groups (IAIGs) at year-end 2024. The document includes the Insurance Capital Standard itself, as envisaged by the IAIS pending stakeholder comments. |
Comments are due Sept. 21, 2023 |
June 23, 2023 |
Public Consultation on Insurance Core Principles: ICP 14 (Valuation) and ICP 17 (Capital Adequacy) IAIS has issued consultations on draft revised ICP 14 (Valuation), draft revised ICP 14 related terms, draft revised ICP 17 (Capital Adequacy), and draft revised ICP 17 related terms. ICP 14 establishes supervisory requirements for the valuation of asset and liabilities for solvency purposes. ICP 17 establishes regulatory capital resources and requirements. ICP 14 and ICP 17 were not included in the ICP revision of 2019, recognizing that work was on-going on the Insurance Capital Standard (ICS). |
Comments are due Sept. 21, 2023 |
May 23, 2023 |
IAIS publishes Issues Paper on Insurance Sector Operational Resilience Issues Paper on Insurance Sector Operational Resilience identifies issues impacting operational resilience in the insurance sector and provides examples of how supervisors are approaching these developments, with consideration of lessons learnt during the Covid-19 pandemic. It addresses three topics:
IAIS had released a previous version of the Issues Paper for comment; it incorporated this feedback in the current Issues Paper. The summary of feedback, and IAIS’ responses, are available here. |
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Payments Canada |
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June 23, 2023 |
Payments Canada Standards Updated Retail Batch Payment System:
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Effective June 23, 2023 |
May 3, 2023 |
Payments Canada Standards Updated Retail Batch Payment System:
High-Value Payment System – Lynx
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Effective May 3, 2023 |
Legislation |
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June 30, 2023 |
Proclamation: Unclaimed Asset Regime Order Fixing June 30, 2023, as the Day on Which Certain Provisions of the Budget Implementation Act, 2021, No. 1 Come into Force, SI/2023-22, was published in the Canada Gazette Part II on July 5, 2023. The Order brings into force legislative amendments that update the unclaimed asset regime by expanding it to include foreign denominated assets and making it easier for owners of unclaimed assets to become aware of their accounts and claim them. The following Acts are amended:
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Amendments take effect June 30, 2023 |
June 24, 2023 |
The proposed Regulations would exempt negotiated contribution plans from solvency funding requirements and set out enhanced going concern funding standards as well as the information requirements for plan governance and funding policies. The stated rationale for these proposed Regulations is that they would allow negotiated contribution plans to offer more sustainable benefit levels and enhance the retirement security of plan members and retirees. If finalized, the Regulations would come into force on the day Division 8 of the Budget Implementation Act, 2021, No. 1comes into force, but if they were registered after that day, they would come into force on the day on which they are registered. |
Comments are due July 24, 2023. |
June 24, 2023 |
The proposed Regulations would set out the information required to be provided to and published by the entity designated to receive and hold the unclaimed pension balances from terminated federally regulated pension plans. The proposed Regulations would also specify who qualifies as an eligible claimant of unclaimed pension assets and establish the period for how long the designated entity can administer the unclaimed assets before the funds are transferred to the Crown. If finalized, the Regulations would come into force on the day section 142 of the Budget Implementation Act, 2021, No. 1comes into force, but if they were registered after that day, they would come into force on the day on which they are registered. |
Comments are due July 24, 2023 |
June 22, 2023 |
Budget Implementation Act, 2023, No. 1, SC 2023, c. 26 Budget Implementation Act, 2023, No. 1, SC 2023, c. 26(Bill C-47), received Royal Assent on June 22, 2023. Part 4, Division 3, Subdivision A amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to, among other things:
Part 4, Division 10 further amends the amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, along with the Special Economic Measures Act, and the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) to strengthen Canada’s ability to take economic measures against certain persons. Part 4, Division 29 establishes the Canadian Dental Care Plan. Part 4, Division 33 amends the Office of the Superintendent of Financial Institutions Act, the Trust and Loan Companies Act, the Bank Act and the Insurance Companies Act to, among other things:
Part 4, Division 37 amends the Canada Deposit Insurance Corporation Act to clarify that the Canada Deposit Insurance Corporation may administer any contract related to deposit insurance entered into by the Minister of Finance and to allow the Minister to increase the deposit insurance coverage limit until April 30, 2024. |
Part 4, Division 1 in force on June 22, 2023. |
May 6, 2023 |
[Proposed] Form of Proxy (Banks and Bank Holding Companies) Regulations The proposed regulations would repeal and replace the current Form of Proxy (Banks and Bank Holding Companies) Regulations (the Regulations) with the Form of Proxy (Banks and Bank Holding Companies) Regulations, 2023 (the proposed Regulations). Under this proposal, out-of-date references in the Regulations would be replaced by provisions that directly reference National Instrument 51-102, Continuous Disclosure Obligations, and Form 51-102F5 (Information Circular) of National Instrument 51-102. This would follow a similar approach taken in the revised Canada Business Corporations Regulations (CBCR). In making these changes, certain requirements will be added to the proposed Regulations to reflect the approach taken in the revised CBCR and to incorporate the National Instruments. If finalized, Regulations would be effective on date of registration. |
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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.