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If you intend to obtain a banking license in Canada, then your intention is quite logical and your choice of jurisdiction inspires respect because the banking sector here is in the world’s top in terms of reliability and security of doing business. Meanwhile, even a stable financial industry over the past few years has undergone a number of significant transformations in the regulation of the banking services sector in Canada. Especially, the transformations have affected liquidity and capital.

Key regulators

Banking regulation in Canada is heavily regulated by the Banking Act. The Canadian Parliament has legislative power to register Canadian banks and issue notes.

Key financial regulators in Canada are the Financial Institutions Superintendent Office and the Canadian Financial Services Agency. The competence of the latter is to ensure the protection of consumers of banking services, as well as monitoring the work of payment card network operators.

Several other regulatory bodies are also involved in the regulation of banks in Canada. Thus, the Bank of Canada promotes innovative banking systems and is responsible for the currency. At the same time, it is a fiscal agent for the government.

Bank deposit insurance in Canada is under the supervision of the Canadian Deposit Insurance Corporation.

The Banking and Investment Ombudsman is an independent body that helps resolve disputes in Canada between banks and their customers. The Canadian Bankers Association, which works with banks and law enforcement agencies to develop preventive mechanisms, plays a significant role in protecting Canadian clients from financial crime.

Licensing and restrictions

A financial company must obtain a banking license in Canada in order to conduct the following operations:

  • performing the functions of a financial agent;
  • investment advice in Canada;
  • work with payment cards, and a number of others.

Obtaining ownership rights to manage a bank in Canada is carried out in accordance with the Banking Act, which prevents an individual from becoming a major shareholder of a bank. In particular, you cannot be a major shareholder of a bank if its capital exceeds 12 billion USD. Banks with less capital should have at least 35% of voting shares on the stock exchange.

Banks in Canada are prohibited from investing in Canadian securities companies. Banks can invest in securities in Canada but they are prohibited, for example, from acquiring more than 10% of the shares of a non-banking company.

Regulatory changes

Last year, the Canadian government considered assessment to the Banking Act and a number of other banking regulations.

Among them were such proposals:

  • modernize Canada's deposit insurance system;
  • establish monitoring platforms for "open banking";
  • make adjustments to the Law on Payments;
  • pay more attention to the implementation of the latest financial technologies.

However, as of today, most of the comparisons are still under consideration.

Final word

Regulation of the banking sector in Canada is increasingly focused on managing liquidity, as well as minimizing the risks in the work of financial institutions so that the banking sector in this country becomes even more stable and secure.

For more information, please contact our legal professionals who will provide advice on investing in the banking sector in Canada.

To request advice on the regulation of Canadian financial institutions, do not hesitate to contact IQ Decision UK specialists in a convenient way for you. Contacts are indicated on the site.