Federal financial institutions legislative and regulatory reporter

OSFI expects to undertake a comprehensive review of Guideline E-13 in 2022, which will focus on OSFI's compliance risk management approach more ...  Back Forward Save&file Vieworiginal Forward Print ShareFacebookTwitterLinkedIn Follow Pleaselogintofollowcontent. Like Instruct addtofolder: Mysaved(default) Readlater Folderssharedwithyou Registernowforyourfree,tailored,dailylegalnewsfeedservice. Questions?Pleasecontact[email protected] Register Federalfinancialinstitutionslegislativeandregulatoryreporter-May2021 BordenLadnerGervaisLLP Canada June142021 TheReporterprovidesamonthlysummaryofCanadianfederallegislativeandregulatorydevelopmentsofrelevancetofederallyregulatedfinancialinstitutions.ItdoesnotaddressCanadianprovincialfinancialserviceslegislativeandregulatorydevelopments,althoughthisinformationistrackedbyBLGandcanbeprovidedonrequest.Inaddition,purelytechnicalandadministrativechanges(suchaschangestoreportingforms)arenotcovered. May2021 Institution Published TitleandBriefSummary Status FSB May31,2021 TheFinancialStabilityBoard(FSB)haspublishedapublicconsultationonglobaltargetsforaddressingthefourchallengesofcross-borderpayments.ThequantitativetargetsproposedareafoundationalstepintheG20roadmapforenhancingcross-borderpayments,whichwasendorsedbyG20LeadersinNovember2020. Theproposedtargetshavebeendevelopedsothattheyaredirectlyrelatedtothechallenges,provideaclearindicationoftheextentofprogress,areappropriatelyambitious,canbereadilycommunicated,andaremeaningfultoawiderangeofstakeholders.Theyaredesignedtobeasmallnumberofhigh-level,simpletargetsfocusedonend-users.Targetsareproposedacrossthreemarketsegments:wholesalepayments;retailpayments(involvingnon-financialcorporatesorpublicsectorentitiesaspayersorreceiversandperson-to-person(P2P)paymentsotherthanremittances);andremittances. TheFSBproposesend-2027asacommontargetdateforachievingtheindividualtargets,withtheexceptionoftheremittancecosttarget,wherea2030datehasalreadybeensetwithintheUnitedNationsSustainableDevelopmentGroupGoal(UNSDG)andendorsedbytheG20.Progresstowardsmeetingthetargetswillbemonitoredandpubliclyreportedovertime. TheFSBisinvitingcommentsontheproposedtargetsandthequestionssetout.BythetimeoftheOctoberfinalreportsettingthetargets,theFSBwillalsodevelopanimplementationapproachformonitoringthetargetsthatwillsetout: howtargetswillbemeasuredanddatasourcesanddatagapstobefilled; howprogresstowardsmeetingthetargetswillbemonitored;and thefrequencyofdatacollectionandpublication. ThepublicconsultationperiodclosesonJuly16,2021.Thefinalrecommendations,takingonboardfeedbackfromthepublicconsultation,willbedeliveredforendorsementattheG20SummitinOctober2021andpublished. CommentsbyJuly16,2021 IAIS May25,2021 TheInternationalAssociationofInsuranceSupervisors(IAIS),inpartnershipwiththeUnitedNations-convenedSustainableInsuranceForum(SIF),publishedtheapplicationpaperonthesupervisionofclimate-relatedrisksintheinsurancesector.Thepaperprovidesinsurancesupervisorswithconcretetoolstofurtherstrengthentheireffortsinassessingandaddressingrisksfromclimatechange.ItalsosetsoutrecommendationsandexamplesofgoodpracticeconsistentwiththeIAISinsurancecoreprinciples(ICPs). InterestedstakeholderswereinvitedtoawebinarprovidingmorebackgroundonthepaperandaquestionandanswersessiononJune9,from13:00–14:00CEST.Moreinformationandaregistrationlinkcanbefoundhere. BankofCanada May20,2021 Release:Financialsystemreviewsummary—2021 TheCanadianfinancialsystemprovedresilientduringtheCOVID-19pandemic—thankstostrongriskmanagementandunprecedentedfiscalandmonetarypolicysupport. IntheBankofCanada’s2021financialsystemreview,thebank: identifiesthemainforcesthatcanaffectfinancialstabilityinCanada;and explainshowthebankandotherpolicy-makersarehelpingtomaintainfinancialsystemresilienceastheeconomycontinuestorecover. FINTRAC May20,2021 TheFinancialTransactionsandReportsAnalysisCentreofCanada(FINTRAC)announcedthatithassignedamemorandumofunderstanding(MOU)withtheSocietyofNotariesPublicofBritishColumbia(TheSociety)toallowforthesharingofcompliance-relatedinformationinordertohelpstrengthenthecomplianceoftheBritishColumbianotariessectorwiththeProceedsofCrime(MoneyLaundering)andTerroristFinancingAct,andtoreduceduplicationofeffortandcomplianceburdenfornotariespublicinBritishColumbia. UnderthisMOU,FINTRACandTheSocietywillsharecompliance-relatedinformationsuchaslistsofpersonandentitiessubjecttotheirrespectiveactsandregulationsaswellascomplianceexaminationplansresultinginmorecoordinatedandrisk-informedexaminations. Thesharingofcompliance-relatedinformationfacilitatedbythisMOUwillalsohelptoenhancetheknowledgeandexpertiseofeachorganizationregardingnewandevolvingrisksandtrendsinthenotariessectorinBritishColumbiaandacrossCanada. OSFI May20,2021 TheOfficeoftheSuperintendentofFinancialInstitutions(OSFI)announcedthat,effectiveJune1,theminimumqualifyingrateforuninsuredmortgages(i.e.,residentialmortgageswithadownpaymentof20percentormore)willbethegreaterofthemortgagecontractrateplustwopercentor5.25percent. OSFIreceivedover170submissions.Itisclearthatthereareawiderangeofissuesfacinghomebuyers,includinghighindebtedness,rapidlyrisinghomeprices,housingsupply,andcompetitivebidding.WhilesomeofthesuggestionsfalloutsideofOSFI’smandate,wehaveincludedasummaryoftheinputreceivedandourresponseforinformation. Withthefinalizationofthisconsultation,OSFIisalsolaunchinganewprocesstoreviewandcommunicatethequalifyingrateataminimumannually,everyDecember.Thistimingissetwellinadvanceofthehigh-volumespringhousingmarket. AsofJune1,2021,therevisedcalculationoftheminimumqualifyingrateforuninsuredmortgageswillbe: Thegreaterofthecontractrateplus2percentor5.25percent. OSFIwillreviewandcommunicatethequalifyingrateataminimumannually,everyDecember,wellinadvanceofthehigh-volumehousingspringseason. Associatedlinks FINTRAC May18,2021 OnJune1,2021,amendmentstocertainregulationsmadeundertheProceedsofCrime(MoneyLaunderingandTerroristFinancingAct(PCMLTFA)(theamendedregulations)willcomeintoforceandcreateorchangeobligationsforreportingentities(REs)thataresubjecttothePCMLTFA.TheamendmentswerepublishedintheCanadaGazetteonJuly10,2019andonJune10,2020;theycanbefoundhere: REsarerequiredtocomplywithalltheobligationsunderthePCMLTFAandassociatedregulations.FINTRACunderstandsthatsomeREsmayexperiencecertainchallengesinmeetingtheirobligationsbyJune1,2021.Whereverpossible,FINTRACiscommittedtoworkingconstructivelywithREs. OSFI May17,2021 ConsultationResponse:OSFI’sactivitiesonanti-moneylaundering/anti-terroristfinancing(AML/ATF)supervision OSFIandFINTRACcontinuetoworktogethertoeliminateduplicationandredundancyintheapplicationofAML/ATFregulatoryrequirementsforfederallyregulatedfinancialinstitutions(FRFIs). OnOctober16,2020,OSFIissuedanindustryletterseekingFRFIviewsontheongoingrelevanceofOSFI’sGuidelineB-8(Deterring&detectingmoneylaunderingandterroristfinancing),givenFINTRAC’sroleastheCanadianfederalsupervisorforAML/ATF.Specifically,theconsultation,whichclosedonNovember30,2020,soughtFRFIviewson: whetherGuidelineB-8shouldberescindedinfull,orifelementsofGuidelineB-8shouldbemaintainedandincorporatedinarevisedGuidelineE-13(ComplianceManagement);and whetherfurtheramendmentstoGuidelineE-13areneededinrelationtoAML/ATFsupervision,ortoclarifyOSFI’sexpectationsforcomplianceriskmanagementmorebroadly. Inresponsetoconsultationfeedback,OSFIwillrescindGuidelineB-8onJuly26,2021. NocorrespondingamendmentswillbemadetoGuidelineE-13;OSFI’sexpectationsforcomplianceriskmanagementenableappropriateoversightoftheprudentialimplicationsofAML/ATFcompliance.Further,otherOSFIguidancewillbeamended,asrequired(e.g.,toremovereferencestoGuidelineB-8).OSFIexpectstoundertakeacomprehensivereviewofGuidelineE-13in2022,whichwillfocusonOSFI’scomplianceriskmanagementapproachmoregenerally. OSFIandFINTRACareplanningajointinformationsessionforearlyfall2021toexplainhowOSFIandFINTRACwillworktogether,andtoanswerindustryquestions. IAIA May18,2021 Publicconsultation:Draftrevisedapplicationpaperoncombatingmoneylaunderingandterroristfinancing TheIAISpublishedtheapplicationpaperoncombatingmoneylaunderingandterroristfinancinginOctober2013inordertoprovideadditionalguidanceregardingmoneylaunderingandterroristfinancingrisksaffectingtheinsuranceindustry.Thepaperwasprimarilybasedonthethen-currentversionofICP22andontheFATFrecommendations,asrevisedin2012. FollowingvariousupdatesoftheFATFrecommendationsinrecentyearsandpublicationin2018oftherevisedFATFguidanceforarisk-basedapproachinthelifeinsurancesector,theIAISrevisedICP22(whichwasadoptedbytheIAISgeneralmeetinginAbuDhabionNovember14,2019). Inlightofthesedevelopments,theIAIShaspreparedarevisionofthepaperandisnowseekingfeedbackonthisrevisedpaperthroughpublicconsultation.FeedbackisinvitedbyJuly17,2021.FeedbackreceivedbythisdeadlinewillenabletheIAIStofurtherdeveloptherevisedpaperforfinalization.Afterthisdeadline,theconsultationtoolwillbeclosedanditwillnolongerbepossibletosubmitanyfurthercomments. ApublicbackgroundsessionwillbeheldviawebinaronJune2,2021todescribethispublicconsultation,shareitsscope,objectiveandcontentaswellasansweryourquestions.Clickherefordetailsandregistration. UnderIAISprocedures,anapplicationpapercanprovideadditionalmaterialrelatedtoICPsorComFramethathelpwithpracticalapplication,butdoesnotestablishnewstandards.Applicationaaperscanprovideexamplesofgoodpractices,aswellasfurtheradviceandrecommendationsonhowICPsand/orComFramemaybeimplemented. CommentsbyJuly17,2021 OSFI May10,2021 Resultssummary:Technologyriskconsultation OnSeptember15,2020,OSFIreleasedDevelopingfinancialsectorresilienceinadigitalworld(DiscussionPaper).OSFIsoughtfeedbackonarangeoftechnology-relatedriskareas,withafocusoncybersecurity,advancedanalytics,andthetechnologythirdpartyecosystem. Inresponsetotheconsultation,whichclosedonDecember15,2020,OSFIreceivedover50submissionsfromadiversegroupofrespondentsincludingFRFIs,industryassociations,technologycompaniesandconsultingfirms. TherewasbroadsupportforOSFI’semergingprinciples-basedandtechnology-neutralperspectivesontechnologyriskmanagement,aspresentedintheDiscussionPaper.RespondentsindicatedthatOSFIshouldfirstleverageitsexistingguidance,andalignanyadditionalguidancewithexistinginternationalandITstandards.Theattachedannexprovidesabriefsummaryofresponsestotheconsultation. RespondentswillhaveadditionalopportunitiestoprovidefeedbackonspecificOSFIproposalspriortotheissuanceofanyfinalguidance.MoreinformationisavailableinOSFI’snear-termplanofprudentialpolicy. OSFI May6,2021 OSFIreleaseditsprudentialpolicyprioritiesforthenextyear.ThisplanbuildsonlessonsandworkthroughouttheCOVID-19pandemic.Itsetsoutclearprioritiesandtimelinestodeveloppoliciesandguidancethatwillsupportcontinuedresilienceofbanks,insurersandfederallyregulatedprivatepensionplans. Whiletheupdatedplancontainsanumberofspecificguidanceinitiatives,threemainthemesdrivethefocusoverthenextyear.Theyare: Riskmanagementguidance Capitalandaccountingguidance Federallyregulatedprivatepensionplans Throughtheseefforts,andcontinuedconsultations,OSFIisworkingtoimprovetheexistingregulatoryframeworksandtherebyfurtherenhancethesafetyandsoundnessofCanadianbanks,insurersandfederalprivatepensionplans. OSFI May5,2021 OSFIisissuingthefinalversionoftheInstructionGuidefortheTerminationofaDefinedBenefitPensionPlan(theInstructionGuide).TheInstructionGuidesetsoutthefilingandreportingrequirementsforadefinedbenefitpensionplanthathasterminated,inwholeorinpart,underthePensionBenefitsStandardsAct,1985.Theserequirementsalsoapplytoplanswithbothadefinedbenefitandadefinedcontributioncomponent. ThefollowingchangesweremadetotheInstructionGuidesincethedraftversionwasfirstissued: Section5.3–Memberportabilityoptions Addedwordingregardingacceptablepaymentoptionswhenamemberdoesnotrespondtooptionsofferedintheirplanterminationpackage. Section6.2–Contentoftheterminationreport Anaddedparagraphtoreflecttherequirementfromthe2020agreementrespectingmultijurisdictionalpensionplansforanassetallocationbetweenjurisdictionsifamulti-jurisdictionalpensionplanterminateswithinsufficientassetstopayallbenefits. Section7–Locatingmembers,formermembersorotherpersons Addedwordingregardingacceptablepaymentoptionswhenamembercannotbelocated. QuestionsandcommentsconcerningthesechangesoranyofOSFI’sotherrequirementsorexpectationssetoutintheInstructionGuidemaybesentto[email protected]. OSFI May4,2021 OnMarch11,2021,OSFIlaunchedanindustryconsultationonproposedregulatorychangestointroducethelatestandfinalroundofBaselIIIreformsintoitscapital,leverageandliquidityrequirements,andrelateddisclosureguidelinesforbanks.OSFIstateditwouldundertakepublicconsultationsoncorrespondingchangestotherelatedregulatoryreturnsseparatelyin2021and2022.TheproposedrevisionstotheBCARandLRRreflectthis,andtheyincludespecificrequirementsapplicabletosmallandmedium-sizeddeposit-takinginstitutions(SMSBs). Inaddition,theBCARregulatoryreturnwilltransitiontoXMLfilingformatfromthecurrent‘.dat’filingformateffectivefortheQ12023filingperiodandsubsequentperiods.ThetransitionisdrivenbytheupcomingchangestotheBCARregulatoryreturnandtosupportsystemscalabilityandenhancements.OSFIwillsupportthistransitionbyprovidingclearspecifications,guidanceandtools(e.g.,XML/XSDfiles,technicalspecifications,instructions). QuestionsandcommentsshouldbesenttoOSFIbyemailat[email protected]nolaterthanJuly9,2021. CommentsbyJuly9,2021 IAIS May4,2021 TheIAIShasprogresseditsworkonthecomparabilityassessmentproject–aninitiativethatwillascertainwhethertheaggregationmethod(AM)providescomparableoutcomestotheInsuranceCapitalStandard(ICS).Thedefinitionofcomparableoutcomesandthehigh-levelprinciplestoinformthedevelopmentofthecomparabilitycriteriahavebeenfinalized,followingpublicconsultation.Theresolutionofcommentsmarksanimportantstepinthecomparabilityassessmentproject. FINTRAC May2021 Frequentlyaskedquestionsaboutdomesticpoliticallyexposedpersonsandheadsofinternationalorganizations(HIOs) FINTRAChasprovidedaFAQondomesticpoliticallyexposedpersons(PEPs)andheadsofinternationalorganizations(HIOs)anditsassociatedrequirements. Allbusinesses(commonlyreferredtoas“reportingentities”inFINTRACguidance)coveredunderthePCMLTFAandassociatedregulations,musthaveaprocessinplacetodetermineifpersons(thatis,clients)aredomesticPEPs,HIOs,orfamilymembersorcloseassociatesofadomesticPEPorHIO.WhenthesebusinessesdeterminethatapersonisadomesticPEP,HIO,orafamilymemberorcloseassociateofadomesticPEPorHIO,asapplicable,theymayneedtotakeotherstepsorobtainmoreinformationaboutthepersoninordertomeettheirlegalrequirements.ThismeansthatifapersonisadomesticPEP,HIO,orfamilymemberorcloseassociateofadomesticPEPorHIO,thesebusinessrequirementscouldimpactthemiftheyconducttransactionsorcarryoutactivitieswithabusinesscoveredunderthePCMLTFAandassociatedregulations. ForinformationonforeignPEPsandassociatedrequirements,seeFINTRACsKYCguidanceaddressingPEPandHIO. FINTRAC May2021 UpdatedGuidance:Methodstoverifytheidentityofpersonsandentities TherequirementtoverifytheidentityofapersonoranentityunderthePCMLTFAandassociatedregulationsappliestoallRes.Thisguidanceexplainsthemethodsthatcanbeusedtoverifytheidentityofapersonoranentity.Forspecificinformationonwhentoverifytheidentityofapersonoranentity(thetimingrequirement),seeyourREsector'sguidanceonwhentoverifytheidentityofpersonsandentities. EffectiveJune1,2021 FINTRAC May2021 Updatedguidance:Thirdpartydeterminationrequirements TheFinancialActionTaskForce(FATF),theEgmontGroupandotheranti-moneylaunderingandanti-terroristfinancingauthoritativebodieshaveobservedthatthirdpartieshavebeenusedinseveralmoneylaunderingandterroristfinancingcases.Itisnotuncommonforcriminalstousethirdpartiesasamethodtoevadedetectionbydistancingthemselvesfromtheproceedsofcrime. ThisguidanceexplainsthethirdpartydeterminationrequirementsunderthePCMLTFAandassociatedregulations.Theserequirementsapplytoallreportingentity(RE)sectors,butonlytocertaintransactionsandactivities,asspecifiedinthisguidance. EffectiveJune1,2021 FINTRAC May2021 Updatedguidance:ReportingterroristpropertytoFINTRAC TerroristpropertyreportingrequirementsunderthePCMLTFAandassociatedregulationsareapplicabletoallreportingentity(RE)sectors. Specifically,whileyouhavetheobligationtosubmitaTerroristPropertyReport(TPR)toFINTRACunderPCMLTFAandassociatedregulations,thisobligationistriggeredwhenyouarerequiredtomakeadisclosureundersubsection83.1oftheCriminalCode(Canada)orsection8oftheRegulationsImplementingtheUnitedNationsResolutionsontheSuppressionofTerrorism(RIUNRST).ItisthereforeimportantforREstofamiliarizethemselveswiththeirCriminalCodeandRIUNRSTobligationsinordertobeabletocomplywithapplicableTPRobligationsunderthePCMLTFA.AsrequiredbytheCriminalCodeortheRIUNRST,youmayalsohaveadditionalactivitiesassociatedtotheseobligations.Further,youmaybesubjecttoadditionalobligationsregardingterroristgroups,listedpersonsandothersanctionedindividualsandentities(knownas“DesignatedPersons”).TheseobligationsfalloutsideofthescopeofthePCMLTFAandassociatedregulationsandwillnotbeaddressedinthisguidance.MoreinformationwithrespecttotheseobligationscanbefoundundervariousCanadianstatutesandregulations. EffectiveJune1,2021 FINTRAC May2021 Updatedguidance:Prepaidpaymentproductsandprepaidpaymentproductaccounts TheguidanceexplainstherequirementsunderthePCMLTFAandassociatedregulationsrelatedtoprepaidpaymentproducts(PPPs)andPPPaccounts. EffectiveJune1,2021 FINTRAC May2021 Updatedguidance:Transactionreportingguidance:The24-hourrule ThisguidancedescribeswhenREsmustconsidermultipletransactionswithina24-hourperiodasa“singletransaction.”The24-hourruleappliestoallREsasrequiredbythePCMLTFAandassociatedregulations. FromJune1,theseobligationswillapplyonlytothereportingoflargevirtualcurrencytransactions.Theobligationswillapplytolargecashtransactions,electronicfundstransfers,andcasinodisbursementswhenFINTRACupdatesthereportformsforthosetransactions.Untilthen,REsshouldcontinuetoapplythe24-hourruleasoutlinedinFIN4(pre-June1,2021).FurtherdetailsarefoundintheNoticeonforthcomingregulatoryamendmentsandflexibilityandthemessageconcerningFINTRAC'sImplementationofregulatoryamendments. EffectiveJune1,2021 FINTRAC May2021 Updatedguidance:Travelruleforelectronicfundsandvirtualcurrencytransfers Thisguidanceisapplicabletofinancialentities(FEs),moneyservicesbusinesses(MSBs),foreignmoneyservicesbusinesses(FMSBs),andcasinos.ItexplainsrequirementunderthePCMLTFAandassociatedRegulationstoincludeorobtaincertaininformationinrelationtoanelectronicfundstransfer(EFT)oravirtualcurrency(VC)transfer(i.e.,the“travelrule”). EffectiveJune1,2021 BordenLadnerGervaisLLP- CindyY.ZhangandDonnaSpagnolo  Back Forward Save&file Vieworiginal Forward Print ShareFacebookTwitterLinkedIn Follow Pleaselogintofollowcontent. 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