Budget 2025 Maintains Momentum In Financial Services Industry Reform

On November 4, 2025, the Canadian federal government announced a number of legislative measures in Budget 2025 aimed at the financial services sector. Taken together, these measures primarily consolidate and advance ongoing reform initiatives that have been in development for some time. If enacted, the proposed changes are intended to benefit both Canadian consumers and the financial services industry as a whole.

Highlights if the Measures Pass

• Canada's legislative landscape will better support small, medium and alternative financial services providers, such as credit unions, smaller financial institutions and fintechs.
• Canada will have an open banking framework that allow read and write access for participating businesses – when Real-Time-Rail is live and in widespread use.
• Canada will have a data-mobility framework on an "economy-wide" basis. We anticipate this will facilitate adoption in other data-rich sectors outside of financial services and banking (e.g., health, telecommunications, real estate/mortgage lending, insurance).
• Canada will have a legislative regime for issuers of fiat-backed stablecoins.
• Canada will have a National Anti-Fraud Strategy to protect consumers from fraud and scams. Canada will form:
  • a centralized Financial Crime Agency to lead the enforcement against complex financial crime; and
  • a partnership between Canada's biggest banks and law enforcement under the banner of the Integrated Money Laundering Intelligence Partnership (IMLIP) to share information for anti-money laundering (AML) purposes within the parameters of privacy law.

Consumer-Driven Banking (often referred to as Open Banking) and the Real-Time-Rail

Budget 2025 proposes long-awaited legislation to operationalize Canada's open banking framework. Although the enabling statute, the Consumer-Driven Banking Act received royal assent in 2024, regulations have not been made available for review, commentary or implementation. Based on Budget 2025, the government has committed to complete legislative measures required to implement open banking in Canada, in particular by granting Canadians data-mobility rights through changes to the Personal Information Protection and Electronic Documents Act (Canada) (PIPEDA).

Other notable changes follow:

• A transfer of supervisory authority for the regime from the Financial Consumer Agency of Canada to the Bank of Canada.
• A clear statement to extend the data sharing framework "economy-wide". We expect this to mean wider data sets will be subject to the data sharing framework, that is not limited to data related to financial services products and services, which is the current scope of the Consumer-Driven Banking Act.
• The intention to legislate the ability for "write-access" by mid-2027 – the first commitment of this kind from the Canadian government made publicly. If legislated, this will enable payment initiation as part of the open banking framework – providing Canadians with new ways to pay directly from their bank account.

Completion of the framework will also allow Canada to keep pace with open banking formulation in other jurisdictions, such as the UK and EU.

Budget 2025 states that the timeline for completing this next phase of consumer-driven banking is anticipated by mid-2027 once Payments Canada's Real-Time Rail (RTR) is live and in "widespread use". There have been many delays with respect to the launch of RTR, but this announcement is a strong indicator of the government's support for continued momentum in ongoing developments in the financial services sector.

We anticipate releasing another article on consumer-driven banking/open banking shortly.

Stablecoin Regulation

As anticipated, the federal government also announced its intention to regulate the issuance of fiat-backed stablecoins, which we discuss in further detail in our article Budget 2025 proposes to introduce federal stablecoin legislation.

Enabling Growth of Credit Unions and Smaller Financial Institutions

Budget 2025 seeks to implement the findings of previous federal government reviews and consultations¹ involving the financial sector with respect to increasing competition and choice for Canadians. To encourage growth and expansion of federal credit unions it proposes measures to make amalgamation or asset acquisition, as well as the transition of provincial credit unions to federal credit unions, easier. This will involve amendments to a number of federal statutes such as the Bank Act (Canada) (Bank Act), the Canada Deposit Insurance Corporation Act (Canada), and the Financial Consumer Agency of Canada Act (Canada). Also proposed are amendments to allow for the growth of smaller federally regulated financial institutions. These include a proposed increase in the threshold amount of equity that triggers the requirement to be publicly held from $2 billion to $4 billion, allowing small banks to grow without needing to change their ownership structure.

Consumer Protection

Budget 2025 also proposes a number of additional consumer protection measures that will apply to federally regulated financial institutions, if implemented, including:

• the ability for consumers to immediately withdraw an initial $150 (an increase from $100) from a deposited cheque, and elimination of the current distinction between depositing cheque funds in person (where the initial funds are available immediately) versus any other manner (where the initial funds are available for withdrawal after one business day);
• new transparency requirements for banks for cross-border transfers, including associated foreign exchange costs;
• additional obligations on financial institutions to investigate and attempt to resolve misdirected payments; and
• prohibitions on investment and registered account transfer fees, and requirements for timely transfer of such accounts (draft regulations anticipated to be published by spring 2026).

In addition, the federal government has requested the Financial Consumer Agency of Canada (FCAC) to prepare a report on the "structure, level, and transparency" of fees charged to consumers by Canadian banks. It is anticipated that such report will inform future legislative changes.

Financial Crime and Anti-Money Laundering

Budget 2025 introduces several measures to strengthen Canada's framework for addressing financial crime, money laundering and fraud. Notably, Budget 2025 re-introduces controversial measures contained in Bill C-2² that were removed in the subsequent Bill C-12, namely:

• measures to ban large-cash transactions ($10,000 or more);
• measures to ban third party cash deposits; and
• amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) (PCMLTFA) and PIPEDA to clarify public-private information sharing without the knowledge or consent of a subject for anti-money laundering purposes.

Budget 2025 re-proposes to establish a new Financial Crimes Agency as the lead and centralized federal enforcement agency and to amend the PCMLTFA to restrict large cash transactions and third-party cash deposits (noted above), enhance supervision and penalties through a new compliance-agreement framework, and clarify information sharing between public and private sectors under the IMLIP, with related amendments to PIPEDA.

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) would also be added as a member of the Financial Institutions Supervisory Committee, enabling greater coordination with prudential regulators and the agency.

Amendments to the Bank Act would require federally regulated financial institutions to adopt policies and procedures to prevent consumer targeted fraud, obtain express consent from consumers for certain account features, and report anonymized fraud data to the FCAC.

Budget 2025 also proposes related legislative changes, including amendments to the Special Economic Measures Act (Canada)to expand sanctions reporting requirements for financial institutions, amendments to the Retail Payment Activities Act (Canada) to protect confidential supervisory information, and amendments to financial institutions statutes to prohibit bearer-form securities.

Expanding OSFI's Purview

In addition, the federal government proposes expanding the purview of the Office of the Superintendent of Financial Institutions (OSFI) in a number of ways including: (i) by setting out additional matters that OSFI will consider in approving transactions involving federal banks, insurance companies and trust and loan companies; (ii) replacing statutory limits, including limits on borrowing and portfolio investments in commercial loans, with guidance issued by OSFI; and (iii) proposing amendments to legislation governing federal financial institutions, insurance companies, and trust and loan companies to expand OSFI's authority to address integrity and security risks within these institutions, which is not unexpected given the criticality of data and technology in the financial services sector.

Together, these measures are intended to modernize enforcement, strengthen coordination, and reduce financial integrity risks in Canada's financial system.

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Footnotes

1. See, for example, Consultation Paper: Proposals to Strengthen Canada's Financial Sector.

2. For details on Bill C-2, see our article Bill C-2: Canada's Crusade to Reform AML and Enhance FINTRAC Powers.

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