Banking & Financial Institutions

The Banking Law practice area encompasses representing domestic and international providers and consumers of debt financing including, on the lending side, domestic and foreign banks, bank holding companies, leasing companies, finance companies, and other financial institutions; and, on the borrowing side, corporate, government, institutional, individual, and financial intermediary borrowers. Work includes incorporation of banks; all manner of corporate and private lending, financing and refinancing; cross-border and international banking transactions; financial leasing; loan syndications and participations; preparation of all manner of real and personal property security documentation; trade finance; negotiable instruments; sovereign risk lending; gold loans; project loans; interbank transaction arrangements, credit card facilities, electronic banking, payment and clearing systems; and all matters of a regulatory and corporate governance nature including capital adequacy and financial market integrity.

Payments Modernization

As the global payments landscape explodes with faster and more efficient systems, Canada is leading the pack with a host of changes underway to simplify, enhance, and speed up the way payments are made. The federal government is in the midst of implementing a new retail payments oversight framework, to be regulated by the Bank of Canada, that will allow for innovation and competition from new businesses that come under the regulation.

Among the changes, Canada will be one of some 30 countries around the world implementing ISO 20022, a global payments message standard that will allow large quantities of data to be transmitted with a payment.

“Data is very powerful, and one of the things that’s exciting about it is how it’s an enabler of innovation for financial institutions that are providing financial services,” said Anne Butler, Chief Legal Officer and Vice President of Policy and Research at Payments Canada, in Canadian Lawyer. “You’ll be able to reconcile payments more easily and send meaningful messages with payments. This is very valuable to businesses.”1 Benefits are expected to include smoother cross-border exchanges, opportunities for automation, and innovation in products and services.

As part of the overhaul, Payments Canada is in the middle of preparing a new high-value payments system, Lynx, which is expected to go live in the fall of 2021. Canada’s new Real-Time Rail system will offer faster payments and provides a huge opportunity for innovation from smaller players, Butler said. The 24/7 system will facilitate the real-time delivery of low-value payments in a matter of seconds. Same-day settlements will speed up transactions to provide faster services for clients. The Department of Finance aims to regulate new entrants to the payments system, which will bring welcomed competition for the large banks.

Open Banking and Digital ID

The Canadian government is continuing to assess the complexities surrounding open banking and its potential to offer a secure way to consent to sharing financial transaction data. Financial institutions are busy preparing for the changes and updating systems to take full advantage of the anticipated opportunities and to ensure that data privacy and cybersecurity are top of mind.

In another development, digital ID with respect to payments is advancing and will likely remain at the top of the agenda for policy-makers, politicians, and business leaders. SecureKey recently launched Verified.Me in collaboration with financial institutions including BMO and Scotiabank. The app offers a secure way to verify identity.

“With the new authentication methods available through mobile devices, we need to ensure that we have the right tools in place to authorize payment transactions in the moment,” said Richard Shimoda, senior legal counsel at Scotiabank, in Canadian Lawyer. “Digital ID is critical to this and will play an important role in the immediate future of mobile commerce.” In order to enable frictionless commerce, Shimoda said he hopes to see digital integration with businesses to support the purchasing and payment behaviors of consumers.

Of these efforts at payments modernization, Shimoda said: “It’s an ongoing process, and challenging, because the roadmap for [the payments modernization program] is frequently being fine-tuned and adjusted, with the government’s plans and timing for legislative changes still to follow, but so far it’s been an interesting journey.”

  1. Saddleton, Lucy. “Payments modernization in Canada brings opportunities for General Counsel.” Canadian Lawyer. November 14, 2019.