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Enforcement tools

Publication date: June 17, 2024

This supervisory policy lists the enforcement tools the Bank could use if enforcement action is needed against individuals, entities and payment service providers.

For terminology about retail payment supervision, refer to the glossary.


Following an investigation of potential contraventions of the Retail Payment Activities Act (RPAA) and the Retail Payment Activities Regulations (RPAR), the Bank of Canada will assess whether the evidence gathered is sufficient to pursue an enforcement action and, if so, the choice of enforcement tool to use. The Bank may use a range of supervisory enforcement tools:

  • warning letter
  • compliance agreement
  • notice of violation (NOV)
    • with an administrative monetary penalty (AMP)
    • with an AMP and a compliance agreement
  • compliance order
  • court enforcement
  • revocation of registration status

Choosing an enforcement tool

When choosing the type of enforcement tool to use, the Bank will consider the facts and circumstances of each case, including:

  • the impact of the current violation (potential or actual harm)
  • the general compliance history of the payment service provider (PSP)
  • the circumstances of the current violation (e.g., the degree of cooperation, intent and negligence or efforts to address non-compliance)

In alignment with its guiding principles, the Bank seeks to encourage and promote compliance with the requirements for registration, operational risk and safeguarding of end-user funds by investigating potential violations and acting on them when required with the appropriate enforcement tool. The Bank will maintain fairness in enforcement decisions by implementing a consistent approach to assessing violations and by selecting the appropriate tool to fit the nature and circumstances of each case.

The Bank will thoroughly review decisions to use enforcement tools to ensure that they are proportionate to the violation committed and that the tool(s) selected will ultimately promote a change in compliance behaviour.

The enforcement tool used must adequately encourage and motivate the PSP to change its behaviour to comply with its legislative obligations, and it must encourage other PSPs to adopt policies and procedures designed to implement their obligations.

Deterrence is crucial because it can shape behaviour and in turn reduce the chances of poor controls and misconduct by PSPs. A robust enforcement regime provides a credible deterrent to non-compliance if the potential costs of committing a violation outweigh the potential benefits. At the same time, the Bank will be careful to ensure that any enforcement tool used is proportionate to the circumstances of the violation and will not punish the PSP.

Types of tools

This section describes the enforcement tools available to the Bank after an investigation.

Warning letter

The Bank may issue a warning letter to identify areas of non-compliance and seek corrective actions.

In a warning letter to the PSP, the Bank will communicate the PSP’s violations or potential violations and detail the Bank’s expectations on corrective actions to address the violation as well as any possible escalation of enforcement for future violations and the amount of a potential AMP.

In any future investigations and enforcement actions against the same PSP, the fact that the PSP has been previously warned or advised by the Bank through a warning letter may be taken into account.

Compliance agreement

The Bank may establish a formal agreement with the PSP on measures to be taken to further the PSP’s compliance.

The compliance agreement of section 71 of the RPAA is meant to be collaborative in nature and comes without an NOV or penalty. However, if a PSP fails to implement corrective actions specified in the agreement, this could result in an NOV and further enforcement actions.

Notice of violation

The Bank may issue an NOV with respect to violations of the RPAA. The designated violations can be found in the AMP schedule in the RPAR.

Notice of violation with an AMP

If the Bank has reasonable grounds to believe that the PSP has committed a violation, the Bank may issue an NOV with an AMP. The prescribed penalty amounts can range from $0 up to $1 million for serious violations or up to $10 million for very serious violations.

In determining the AMP amount, the Bank will consider factors such as:

  • the prescribed penalty amount (if any)
  • the harm done by the violation
  • the PSP’s violation history
  • the degree of the PSP’s negligence and intent
  • whether the imposition of the AMP is a fair and proportionate tool that will encourage change in compliance behaviour

The PSP may, within 30 days of being served with an NOV, make representations to the Governor, or the Governor’s delegate , through the Governor’s review process. In cases where representations are made, the Governor or Governor’s delegate will provide a Governor’s decision indicating whether the violation was committed and, if so, whether to impose the penalty proposed in the NOV, a lesser penalty or no penalty.

Once proceedings have ended, the Bank will publish the name of the PSP, the nature of the violation, the amount of any penalty imposed and the reasons for issuing the decision.

Previously issued NOVs count toward the violation history of the PSP for future AMPs and grounds for revocation of registration under paragraph 52(g) of the RPAA, as well as grounds for refusal under paragraph 48(1)(g) of the RPAA.

Notice of violation with an AMP and a compliance agreement

NOVs that are issued with an AMP could also include an offer to reduce the AMP by 50% if the PSP enters into a compliance agreement of paragraph 76(2)(b) of the RPAA with respect to the violation.

The agreement will identify the non-compliance, set out the corrective measures to be taken and conditions to be met, and specify the period for the PSP to comply with the provision that was contravened and the amount of the reduced penalty to be paid.

If the Bank considers that the PSP has complied with a compliance agreement, the Bank will serve a notice to that effect to the PSP. No further proceedings may be taken against the PSP with respect to the violation that was addressed in the compliance agreement.

However, a failure to comply with the terms and conditions of the agreement may result in the issuance of a notice of default, which will require the PSP to pay the remaining 50% of the original AMP plus an additional penalty that equals 100% of the original AMP.

The PSP may, within 30 days after the day on which the notice of default is served, file an application for a Governor’s review of the Bank’s decision to issue the notice of default.

If the PSP neither pays the amounts set out in the notice of default nor files an application for a Governor’s review within 30 days after the day on which the notice of default is served, it will be deemed to have not complied with the compliance agreement and must pay the amount set out in the notice of default without delay.

Compliance order

The Governor, or the Governor’s delegate, is authorized to intervene if a PSP is committing or is about to commit an act that could have a significant adverse impact on a specified individual or entity (i.e., an end user, a PSP, or a clearing house of a clearing and settlement system that is overseen by the Bank under the Payment Clearing and Settlement Act).

The Governor, or the Governor’s delegate, may, through a Governor’s order, direct the PSP to cease or refrain from committing the act or pursuing the course of conduct; and perform any acts that, in the Governor’s opinion, are necessary to remedy the situation.

A PSP is provided with an opportunity to make representations with respect to the proposed Governor’s order before it comes into effect. The notice of proposed Governor’s order will specify a deadline to make representations. The Governor's order comes into effect once the Governor, or the Governor's delegate, issues the final Governor’s order.

If in the opinion of the Governor, or the Governor’s delegate, the length of time required to make representations would be prejudicial to the public interest, they may issue a temporary order, which has the same effect as a Governor’s order but comes into effect the day on which it is issued. The PSP has 30 days after the day on which the temporary order is made, or a shorter period that is specified in the order, to make representations.

If the PSP does not make representations within the period or if it makes representations and the Governor, or the Governor’s delegate, is not satisfied that sufficient grounds exist to revoke the temporary order, the order continues to have effect after the expiry of the period until the PSP is compliant.

If the PSP makes representations within the period and the Governor, or the Governor’s delegate, is satisfied that sufficient grounds exist to revoke the temporary order, the order may be revoked with immediate effect and before the expiry of the period.

If a PSP contravenes a Governor’s order or temporary order, the Governor may apply to a superior court for an order requiring the PSP to cease the contravention of the compliance order.

Court enforcement

If an individual or entity is contravening or has contravened a provision of the RPAA, the RPAR or a compliance order, the Governor may apply to a superior court for an order requiring the individual or entity to cease the contravention or to comply with the provision.

The Bank may also pursue court enforcement to recover debts due to the Crown (AMPs) as well as debts due to the Bank (assessment fees).

Revocation of registration status

The Bank may revoke a PSP’s registration for several reasons under section 52 of the RPAA and related regulations, including if the PSP has committed a violation under the Act, ceases to perform retail payment activities or no longer falls within the scope of the RPAA. We will publish a policy on refusal and revocation ahead of the registration period beginning on November 1, 2024.

If a PSP’s registration has been revoked by the Bank, it may have the option to make representations through a Governor’s review process.

The Bank can also revoke registration status based on specific information provided by Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and must revoke registration status when directed to do so by the Minister of Finance. A PSP may make representations to the Minister of Finance to request a review.

If the Bank revokes a PSP’s registration, this information will be made public through the Bank’s public list of refusals and revocations, including the reasons for refusal and revocation.

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