Payments Regulatory Year In Review And 2026 Outlook

This Bulletin summarizes key regulatory developments impacting the payments sector in 2025 and looks ahead to 2026. Overall, changes to payments and anti-money laundering and anti-terrorist financing legislation continued to progress as Canada seeks to mitigate the digital risks of its modern financial sector.

1. Regulatory Framework for PSPs Launches

As of fall 2025, Payment Service Providers (PSPs) are required to comply with the obligations set out in the Retail Payment Activities Act (RPAA):

• The Bank of Canada launched its public registry of PSPs in October 2025 (although some applications are still being processed), which is updated on a rolling basis. This followed the initial requirement for all operating PSPs to apply for registration between November 1-15, 2024. New PSPs, or existing PSPs who did not file an application for registration within the transition window in November 2024, are now required to be registered with the Bank before performing any retail payment activities.
• The application process also extends to registered PSPs that undergo a change in control, which has M&A timing implications for registered PSPs. The Bank of Canada has up to 45 days to decide whether to refuse an application for change of control once it deems the re-registration application complete. Information will then be shared by the Bank with Finance Canada, for the Minister to consider whether to conduct a national security review. The Minister may extend his 60-day period for consideration and the actual 180-day period for the security review, as necessary.
• The RPAA risk management and safeguarding of funds requirements came into force on September 8, 2025. More details are available in our bulletin, Payment Services Providers - Preparing to Comply with Safeguarding of Funds Requirements. While all applicants must now comply with operational risk controls and end-user fund safeguarding, reporting requirements will apply only once registration is confirmed.

2. More Efforts to Strengthen Canada's AML/ATF Regime

There were a number of developments in 2025 impacting Canada's anti-money laundering and anti-terrorist financing regime:

• Various amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act ("PCMLTFA") and its regulations came into force this year, including amendments that brought new sectors within the scope of the AML/ATF regime, such as factoring companies, cheque cashing businesses, financing and leasing companies, title insurers and those providing acquirer services in relation to private automated banking machines. There were also amendments with respect to the requirement to confirm beneficial ownership for entities that are incorporated under the CBCA and that are assessed as posing a high-risk of a money laundering or terrorist financing offence, and amendments that require reporting entities to report to FINTRAC (in addition to their existing obligations to report to the RCMP or CSIS) property in their possession or control that belongs to individuals or entities designated under Canadian sanctions legislation. Additional information about some of these changes is available in our bulletin, Further Expansion of Canada's AML Regime.
• In June, the federal government tabled Bill C-2, the Strong Borders Act, which, if passed, would make significant amendments to the PCMLTFA and its regulations. Key changes included increases to administrative monetary penalties, new requirements for reporting entities to enrol with FINTRAC, and restrictions on Canadian businesses and charities accepting cash payments of $10,000 or more. Additional details are available in our bulletin, New Border Security Bill Aims to Expand and Strengthen Canada's AML Regime. A smaller subset of these changes were also included in Bill C-12 - Strengthening Canada's Immigration System and Borders Act, which is also not yet passed.

3. Supporting Financial Consumers during Banking Innovation

The digital transformation of banking services continued its rapid pace in 2025. The federal government responded with several legislative changes and consultations on possible changes:

• In July, Finance Canada issued a detailed consultation on possible changes to the CDIC deposit insurance framework, potentially expanding coverage on eligible deposits.
• The federal Budget proposed new legislation to regulate the issuance of stablecoins, commonly tied to fiat currencies. It will require issuers to maintain and manage adequate asset reserves, establish redemption policies, and implement risk management frameworks. Amendments are proposed to the RPAA to establish the Bank of Canada's oversight mandate.
• The federal Budget also confirmed the government's intent to advance open banking by introducing legislation to complete the Consumer-Driven Banking Act. It shifted oversight from FCAC to the Bank of Canada, aligning with the Bank's oversight of PSPs. Additional legislation is targeted for mid-2027 and was tied in the Budget to Payments Canada's completion of the Real-Time Rail project in 2026 and its widespread use. Amongst the expected changes, the government aims to amend the Personal Information Protection and Electronic Documents Act to introduce a legal right to data mobility. This means Canadians will be able to securely transfer their financial data between organizations in a standardized format.
• In September, the Canadian Payments Act was amended to expand membership eligibility in Payments Canada to PSPs supervised by the Bank of Canada, credit union locals that are members of a credit union central, and operators of designated clearing houses. Together with the proposed Payments Canada clearing rules of the Real-Time Rail project, these changes have the potential to foster significant innovation by expanding payment system access to non-traditional firms.
• As more pre-authorized debits (PADs) co-exist with instant e-transfers, a cap of $10 for non-sufficient funds (NSF) fees was included in the Financial Consumer Protection Framework Regulations. Our bulletin Financial Services Regulatory Update: Diversity Disclosures and NSF Fee Caps provides details on the new regulation specifics, which come into force on March 12, 2026.

Looking Ahead

The next year will continue to be busy for Payments regulatory developments. As outlined, new framework details are expected on consumer-driven banking as well as the anti-money laundering and anti-terrorist financing regime.

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.