Bill C-30, 2021 Budget Implementation Law No. 1 was introduced to the House of Commons for first reading on April 30, 2021. Bill C-30 will introduce into law new policy measures set out in the 2021 federal budget released earlier in April, many of which have an impact on financial institutions and other financial service providers, as discussed in our previous Blakes Bulletin: Federal Budget 2021 – Certain Measures Relating to Financial Services. This bulletin provides an overview of the specific legislative measures included in Bill C-30 that affect or deal with financial services and related matters.
1. RETAIL PAYMENT MONITORING FRAMEWORK
As planned and announced in the 2021 federal budget, Bill C-30 presents a draft of the long-awaited project Retail Payment Activities Act. The new payments regulatory regime, to be regulated by the Bank of Canada, is innovative in that it provides the first regulatory regime for retail payment service providers in Canada. For a detailed look at the new frame, please see our companion Blakes Bulletin: Retail Payments Regulation in Canada – The Retail Payment Activities Act has come into force.
2. PROCEEDS OF CRIME (MONEY LAUNDERING) AND TERRORIST FINANCING ACT (LRPC)
Bill C-30 introduces several changes to the PCMLTFA, including the following:
Providers of armored vehicle services, referred to as “persons and entities engaged in the transport of currency or certain other financial instruments” will become reporting entities under the PCMLTFA. Bill C-30 makes it clear that armored vehicle services will be regulated as a class of money-service businesses under the PCMLTFA.
Changes are made to the definitions of politically vulnerable domestic (Domestic PEP) and head of an international organization (HIO). The definition of domestic PEP is broadened to include “prefect, or other similar officer of a municipal or local government” as well as mayors and the HIO definition is amended to include a head of an international sports organization, among other changes.
Bill C-30 also allows the Financial Transactions and Reports Analysis Center of Canada (FINTRAC) to recover its compliance costs. FINTRAC will have the authority to make assessments payable by reporting entities based on the amount of certain expenses incurred by FINTRAC. The implementing regulations, which have not yet been published, will set out the details of the new assessment framework.
3. UNCLAIMED PROPERTY
The Bank Act and the Trust and Loan Companies Act contain provisions requiring the transfer of unclaimed deposits and checks to the Bank of Canada after a 10-year abandonment period and the provision of prior notices to the Bank of Canada. customers regarding the amount of their unclaimed property. Bill C-30 amends these provisions to include deposits and checks denominated in foreign currencies and to require that unclaimed property notices be provided to the customer’s email address (if known) in addition to providing the notices. by mail. Bill C-30 also expands the scope of information that must be provided to the Bank of Canada at the time of the transfer of unclaimed property to include the client’s date of birth and social insurance number, although the changes corresponding to the Bank of Canada Act clarify that the Bank of Canada cannot publish this information in its online unclaimed property database. Bill C-30 will also require that copies of signature cards and signing authorities be provided to the Bank of Canada at the time of the transfer of unclaimed property, but without prior written request from the Bank of Canada, as the ‘requires current legislation.
Bill C-30 also amends the Pension Benefits Standards Act, 1985 introduce an unclaimed property regime for pension funds.
4. SERGEI MAGNITSKY LAW
Canadian financial institutions and investment dealers are required to report to their principal regulator on a monthly basis if they hold property of listed persons Justice for Victims of Corrupt Foreign Officials Act (Law of Sergei Magnitsky) or terrorist groups listed under Criminal Code. Bill C-30 amends the Sergei Magnitsky Act to require that these reports be filed only in cases of actual correspondence. If there is a match, reports should be filed promptly and every three months, rather than monthly. There is no corresponding amendment included to remove the zero monthly deposit requirement under the Criminal Code. As such, financial institutions and securities dealers will continue to be required to file monthly penalty reports under the Criminal Code. Federal and provincial regulators, including the Office of the Superintendent of Financial Institutions and securities commissions, should update existing monthly reporting forms and processes to reflect these changes.
5. RESOLUTION FRAMEWORK
Bill C-30 introduces several changes to the bank resolution framework under the Canada Deposit Insurance Corporation Act (SADC Act). Among others, these modifications:
Extend the suspension of the CDIC Act to circumstances in which there is a pecuniary breach of a bail-in obligation following the issuance of a resolution order, but before the bail-in conversion is effected
Exclude from the CDIC Act still eligible financial contracts with a central bank, the federal government of Canada or a foreign government
Require CDIC member banks and trust and loan companies to ensure that the suspension provisions of the CDIC Act apply to qualifying financial contracts to which they are a party, but in the circumstances and in the manner prescribed by SADC bylaws, which have not yet been made public
Make certain changes to the compensation framework under the resolution provisions of the CDIC Act (similar changes Payment Clearing and Settlement Act provisions governing the resolution of designated financial market infrastructures)
Bill C-30 also amends the deposit protection regime of the CDIC Act to clarify that, in certain circumstances, an omission that results in non-compliance with a requirement of the Schedule to the CDIC Act CDIC will not prevent a deposit from being considered a separate deposit.
6. CANADIAN STUDENT LOANS ACT AND CANADIAN STUDENT FINANCIAL ASSISTANCE ACT
Finally, Bill C-30 follows the federal government’s promise to provide relief to people with federal student loans. Section 30 of Part 4 amends the Federal Student Loans Act, Federal Student Financial Assistance Act, Apprenticeship Loans Act provide that, during the period which begins on April 1, 2021 and ends on March 31, 2023, no interest is payable by a borrower on a guaranteed student loan, a student loan and an apprentice loan. This means that no interest is payable on a federal student loan or on the part of a student loan that is guaranteed by the federal government, whether the loan itself is federal or provincial. Lenders who have provided student loans under provincial or federal student loan programs will need to make the necessary adjustments to these loan portfolios.
This builds on (and effectively replaces the clauses) of Bill C-14 which passed third reading in the House of Commons on April 15, 2021 and provides that no interest is payable on these loans during the period beginning April 1, 2021 and ending March 31, 2022 – that is, Bill C-30 extends the interest suspension period from one year to two.