Canada: Federal Financial Institutions Legislative and Regulatory Reporter — July 2018

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.

July

Institution

Published

Title and Brief Summary

Status

IAIS
[Applicable to insurance companies]

July 31, 2018

Public Consultation on Risk-based Global Insurance Capital Standard (ICS) and Draft Overall ComFrame

The Risk-based Global Insurance Capital Standard consultation document solicits feedback from stakeholders on the Insurance Capital Standard (ICS) ahead of the completion of ICS Version 2.0, scheduled for late 2019, before the monitoring period begins on January, 1 2020. This consultation document covers both issues related to the ICS Version 2.0 monitoring period and the technical aspects of the design and calibration of ICS Version 2.0.

The IAIS is also consulting on the Common Framework for the Supervision of Internationally Active Insurance Groups (IAIGs) (ComFrame). While ICS is part of the ComFrame, it was agreed by the Executive Committee of the IAIS in June 2017 that ICS Version 2.0 would be adopted as a standalone document in 2019. As such, there are two separate consultation documents.

Comments should be provided for both consultations by October 30, 2018.

OSFI
[Banks, Bank Holding Companies, Federally Regulated Trust and Loan Companies, Cooperative Retail Associations]

July 16, 2018

OSFI seeks industry input on the domestic implementation of final Basel III reforms

The final Basel III reforms include changes to the credit risk, operational risk, leverage ratio and credit valuation adjustment frameworks, as well as to the capital floor.

The discussion paper provides stakeholders with OSFI's preliminary views on the scope and timing of the domestic implementation of the final Basel III reforms in Canada. It also includes a series of questions seeking feedback from stakeholders on specific issues, including where OSFI is proposing modifications to better fit the Canadian market.

The proposals in the discussion paper apply to all deposit-taking institutions. However, OSFI will propose future changes to the domestic capital framework to ensure requirements are reflective of the risks faced by institutions that do not use internal models for regulatory capital purposes. Industry feedback on these changes will be sought through a separate consultation process.

Comments should be provided by October 19, 2018

OSFI
[Banks, Bank Holding Companies, Federally Regulated Trust and Loan Companies, Cooperative Retail Associations]

July 7, 2018

Changes to the Capital Adequacy Requirements (CAR) Guideline

The main revisions to the CAR Guideline are related to the domestic implementation of the standardized approach to counterparty credit risk and the revisions to the capital requirements for bank exposures to central counterparties as well as revisions to the securitization framework.

OSFI has also clarified the capital treatment for right-of-use assets resulting from the adoption of IFRS16 beginning in Q1 2019. This treatment will become effective for institutions upon their adoption of IFRS16.

In addition to the above changes:

  • OSFI is incorporating the changes to the capital floor and has also removed the Credit Valuation Adjustment phase-in and other transitional arrangements that conclude at the end of 2018.
  • OSFI is recognizing Kroll Bond Rating Agency Inc. as an eligible external credit assessment institution for capital purposes, effective immediately.
  • OSFI has also provided clarifications throughout the CAR Guideline in response to questions received from the industry as part of its regular annual updates.

Comments should be provided by August 31, 2018.

Financial Action Task Force (FATF)

July 6, 2018

Public Consultation on the Draft Risk-Based Approach Guidance for the Life Insurance Sector

The Financial Action Task Force (FATF) is developing guidance to assist countries, competent authorities, insurers and insurance intermediaries in the application of a risk-based approach to Anti-Money Laundering/Countering the Financing of Terrorism.  The guidance is intended to provide support both to the private sector and to supervisors by focusing on Money Laundering/Terrorist Financing (ML/TF) risks and associated mitigation measures.

The FATF is consulting private-sector stakeholders before the guidance is finalised, and wishes to receive stakeholder views on, and specific proposals to the text of the Draft RBA Guidance Life Insurance.

The draft guidance contains a section on guidance for the private sector. It also includes examples of risk factors relevant for the ML/TF risk assessments of insurance entities (Annex D).

Comments period ended on August 17, 2018.

BIS/ Basel
[Applicable to banks]

July 5, 2018

Global systemically important banks: revised assessment methodology and the higher loss absorbency requirement

The Basel Committee on Banking Supervision (the Committee) has reconfirmed the fundamental structure of the global systemically important bank (G-SIB) framework. There is general recognition that the framework is meeting its primary objective of requiring G-SIBs to hold higher capital buffers and providing incentives for such firms to reduce their systemic importance.

The decision to maintain the core elements of the G-SIB framework will further contribute to the stability of the regulatory environment after the recent finalisation of the Basel IIII post-crisis reforms.

The Committee agreed to the following enhancements to the G-SIB framework:

  • Amending the definition of cross-jurisdictional indicators consistent with the definition of BIS consolidated statistics;
  • Introducing a trading volume indicator and modifying the weights in the substitutability category;
  • Extending the scope of consolidation to insurance subsidiaries;
  • Revising the disclosure requirements;
  • Providing further guidance on bucket migration and associated higher loss absorbency surcharge when a G-SIB moves to a lower bucket; and
  • Adopting a transitional schedule for the implementation of these enhancements to the G-SIB framework.

The Committee reconfirmed the three-year cycle for reviewing the G-SIB framework established when it was first published. In particular, the Committee will pay attention to alternative methodologies for the substitutability category, so as to allow the cap to be removed at that time.

The revised methodology is expected to be implemented in member jurisdictions by 2021

Finance Canada

June 21, 2018

Budget Implementation Act, 2018, No. 1., S.C. 2018, c. 12

Division 4 of Part 6 amends the Bank of Canada Act to ensure that the Bank of Canada may continue to buy and sell securities issued or guaranteed by the government of the United Kingdom if that country ceases to be a member state of the European Union.

Not yet effective

Division 6 of Part 6 amends the Bank of Canada Act to require the Bank of Canada to make adequate arrangements for the removal from circulation in Canada of its bank notes that are worn or mutilated or that are the subject of an order made under paragraph 9(1)‍(b) of the Currency Act.

Effective June 21, 2018

Division 7 of Part 6 amends the Payment Clearing and Settlement Act in order to implement a framework for resolution of clearing and settlement systems and clearing houses, and to protect information related to oversight, by the Bank of Canada, of clearing and settlement systems.

Not yet effective

Division 16 of Part 6 amends certain acts governing federal financial institutions and related acts to, among other things:

  • Extend the scope of activities related to financial services in which federal financial institutions may engage, including activities related to financial technology, as well as modernize certain provisions applicable to information processing and information technology activities (Subdivision A);
  • Permit life companies, fraternal benefit societies and insurance holding companies to make long-term investments in permitted infrastructure entities to obtain predictable returns under the Insurance Companies Act (Subdivision B);
  • Provide prudentially regulated deposit-taking institutions, such as credit unions, with the ability to use generic bank terms under the Bank Act, subject to disclosure requirements, as well as provide the Superintendent of Financial Institutions with additional enforcement tools under the Bank Act and the Office of the Superintendent of Financial Institutions Act, and clarify existing provisions of the Bank Act (Subdivision C); and
  • Modify sunset provisions in certain acts governing federal financial institutions to extend by five years, after the day on which this act receives Royal Assent, the period during which those institutions may carry on business (Subdivision D).

Subdivision A not yet effective (except ss. 310(2), 316(2), 324(2), 329(2) and 340(1), in force on June 21, 2018

Subdivision B not yet effective (except s. 349, in force June 21, 2018

Subdivision D effective June 21, 2018

Subdivision D effective June 21, 2018

To view the Reporter for previous months, please visit our Banking and Financial Services publications page.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions