Banking & Financial Institutions

Banking lawyers represent domestic and international providers and consumers of debt financing. Their work embraces financial institution incorporation; corporate and private lending, financing, and refinancing; cross-border and international banking transactions; financial leasing; loan syndications and participations; preparation of real and personal property security documents; trade finance; negotiable instruments; sovereign risk lending; gold and project loans; interbank transactions; credit card facilities, electronic banking, payment, and clearing systems; and regulatory and corporate governance matters.

FATCA in Canada

The incorporation of the US Foreign Account Tax Compliance Act (FATCA) into Canadian law proved to be very costly for large Canadian financial institutions and an expensive administrative nightmare for smaller ones. On June 19, 2014, Parliament passed the implementing legislation. Its main purpose is to track down Americans who are avoiding their obligations to pay US tax on their worldwide income. The law requires most Canadian financial institutions to report the financial activities of their American clients to the Canada Revenue Agency, who will then provide the details to the IRS pursuant to existing agreements with the US.

The upshot is that FATCA projects have involved or likely will involve a significant internal restructuring for many organizations. Most have been or will be aimed at better aligning an institution’s tax function and its operating structure with the goal of improving communication between in-house counsel, the tax department, and the client relationship department and its managers. In-house tax professionals will have to start by familiarizing themselves with the Inter-Governmental Agreements, the 47 pages of which are the foundation of the Canadian legislation. They will also have to achieve some degree of familiarity with the 500 pages that constitute the US Treasury’s regulations under FATCA.

Fintech Partnerships

As described in a Blake, Cassels & Graydon LLP bulletin: “While countries such as Australia, Singapore and the United Kingdom have made bold strides with fintech regulation, Canada has cautiously tiptoed towards change. Changes to the provisions that hinder the involvement of banks in innovative financial services will be at the top of the banks’ wish list for proposed changes to the Bank Act (as part of the consultation mentioned above), expected this year. In the meantime, one solution for banks will be to build upon the 2016 trend of partnering with smaller fintech organizations. Smaller fintech companies can offer larger banks access to innovative approaches and the latest technology, while the banks, in turn, offer valuable experience in matters such as regulatory compliance, risk management and international profile. The mutual benefits continue to make partnerships an attractive option.”1

  1. Blakes, Cassels & Graydon LLP. “Banking Trends February 2017.” BusinessClass, February 2017.