Canada's payments regulatory framework has reached another important milestone.
The Bank of Canada has announced that it will now begin publicly publishing Notices of Violation issued to Payment Service Providers (PSPs) under the Retail Payment Activities Act (RPAA). It has also launched a public webpage listing its enforcement decisions.
While the Bank has always had enforcement powers under the RPAA, this change significantly increases the reputational consequences of non-compliance.
Enforcement Is No Longer Behind Closed Doors
Previously, many businesses focused primarily on the possibility of receiving an administrative monetary penalty or compliance order.
Now, enforcement action may also become public.
The Bank's new enforcement decisions page publishes information including:
- the legal name of the PSP;
- the date of the Notice of Violation;
- the legislative provision involved;
- whether an administrative monetary penalty was imposed; and
- the status of the enforcement action.
The Bank has indicated that enforcement decisions will generally remain published for five years.
Reputation May Become Just as Important as the Penalty
For many PSPs, the financial penalty may not be the most significant consequence.
A publicly available enforcement decision can be reviewed by:
- customers;
- financial institution partners;
- investors;
- payment processors;
- potential acquirers;
- counterparties; and
- regulators in other jurisdictions.
As Canada's retail payments framework matures, compliance is increasingly becoming a business and reputational issue—not simply a regulatory one.
The RPAA Gives the Bank a Broad Enforcement Toolkit
The publication of Notices of Violation is only one part of the Bank's supervisory powers.
Depending on the circumstances, the Bank may also:
- issue compliance orders;
- impose administrative monetary penalties;
- enter into compliance agreements;
- refuse registration applications;
- revoke registrations; and
- seek court enforcement where appropriate.
The decision to publish Notices of Violation reflects the Bank's broader move toward greater transparency in its supervision of Canada's payment services sector.
Compliance Programs Matter More Than Ever
For PSPs, this development reinforces the importance of maintaining an effective compliance program.
That includes regularly reviewing:
- operational risk management;
- safeguarding of end-user funds;
- incident response procedures;
- annual reporting obligations;
- governance frameworks;
- internal controls; and
- regulatory documentation.
Many compliance issues are easier—and less costly—to address proactively than after the Bank has commenced enforcement action.
Looking Ahead
The publication of enforcement decisions signals that Canada's retail payments regime is entering a more mature supervisory phase. Similar to other financial regulators, the Bank of Canada is now combining monetary penalties with public disclosure to encourage compliance and improve transparency.
Businesses that perform retail payment activities should ensure they understand whether they are subject to the RPAA and, if so, whether they have met their registration and ongoing compliance obligations.
To learn more about Canada's retail payments framework and whether your business may need to register, visit our guide to RPAA registration.
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