2025 Federal Budget: Financial Sector Highlights

On November 4, 2025, Canada’s newly elected federal government released its first budget, Budget 2025: Building Canada Strong (Budget 2025).

Focusing on increasing competition and supporting innovation, Budget 2025 outlines the government’s intention to advance a series of significant financial-sector reforms in Canada. Key measures include completing and expanding the legislative framework for open banking in Canada and aligning it with the new retail payments regime, introducing legislation to regulate stablecoins, and strengthening the financial sector’s anti-money laundering, fraud risk management and national security oversight frameworks.

Below, we highlight the Budget 2025’s key announcements affecting the financial services sector.

Open Banking

A central theme of Budget 2025 is increasing competition in the financial sector, particularly by enabling consumers to more easily choose and move between financial service providers.

To achieve this, the government will move forward with the Consumer Driven Banking Act to complete Canada’s open banking framework and enable consumers to securely share their financial data with accredited third parties. Amendments will also be made to the Personal Information Protection and Electronic Documents Act (PIPEDA) to introduce a new data mobility right, extending secure data-sharing capabilities across the financial sector.

In a significant shift, the government will assign oversight of the open banking framework to the Bank of Canada, leveraging its new supervisory role under the Retail Payment Activities Act (RPAA), instead of the previously planned supervision by the Financial Consumer Agency of Canada (FCAC).

Budget 2025 also outlines the federal government’s willingness to move beyond data sharing toward “write access” in the next phase of the open banking framework. This would allow consumers to take direct actions — such as switching accounts or initiating bill payments — through authorized third-party applications. The government intends to introduce legislation by mid-2027, aligned with the expected rollout of the Real-Time Rail payments infrastructure in 2026.

Stablecoins

Budget 2025 also announced forthcoming legislation to regulate fiat-backed stablecoins, also to be overseen by the Bank of Canada. The framework will require issuers to maintain adequate reserve assets, establish redemption policies, implement risk-management systems, and protect consumers’ personal and other sensitive information. As part of broader efforts to safeguard national security in the payments ecosystem, the legislation will also embed national security provisions. Related amendments to the RPAA are anticipated to bring payment service providers that use prescribed stablecoins within the RPAA framework.

Fraud Risk Management

Budget 2025 announced the federal government’s plan to develop a national anti-fraud strategy that would bring together financial institutions, technology firms and telecom companies to tackle fraud schemes. In addition, the government intends to introduce amendments to the Bank Act to require banks to:

• Establish policies and procedures to address consumer-targeted fraud
• Obtain express consent from consumers to enable certain account features, allow consumers to set transaction limits and provide options to disable features
• Report anonymized data on consumer-targeted fraud to the FCAC
• Investigate and attempt to resolve electronic transfers sent to the wrong recipient

Implementing these measures will require system updates and likely changes to consumer-facing customer disclosures, and these measures introduce a net new regulatory obligation for banks.

Consumer Protection Measures

Budget 2025 also sets out measures to lower costs for account transfers, in line with the government’s focus on making it easier for consumers to switch between financial service providers. By spring 2026, the government has committed to introducing draft regulations that will prohibit fees on investment and registered account transfers. Banks and investment firms will be required to process transfers in a timely manner and clearly communicate the absence of fees. The government also indicated it will explore improved transparency for cross-border money transfers, including the disclosure of foreign exchange margins.

Budget 2025 also signalled that additional requirements will be introduced in connection with branch closures by banks.

AML Legislation

Budget 2025 indicated that elements of Bill C-2, which were not included in the government’s new Bill C-12 expanding the enforcement framework under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), could be introduced through the budget implementation legislation. These measures include restricting large cash transactions of C$10,000 or more and limiting third-party cash deposits (cash deposited by one person into another’s account), as well as enhancing information sharing through the Integrated Money Laundering Intelligence Partnership between law enforcement and Canada’s major banks, with corresponding updates to PIPEDA. Budget 2025 also notes that federal legislation regulating financial institutions will be amended to prohibit issuance of bearer instruments.

Prudential Regulation

Budget 2025 sets out several measures that the government intends to introduce to federal financial institutions legislation, which are aimed at supporting competitiveness of small- and medium-sized financial institutions and strengthening the national security oversight. These measures include the following:

• Introducing amendments to support federal credit unions’ growth through amalgamations and asset acquisitions and to facilitate easier transition by provincial credit unions to the federal framework (Budget 2025 does not disclose any details, other than signalling that continued federal credit unions may continue operating their existing auto leasing business permanently, despite the Bank Act leasing restrictions)
• Raising the equity threshold for public float requirement for banks and insurers from the current C$2-billion to C$4-billion
• Revisiting portfolio limits under federal financial institution legislation on equity and real property investments, as well as commercial lending limits applicable to insurers and trust and loan companies, which Budget 2025 notes will be replaced with Office of the Superintendent of Financial Institutions guidance instead
• Requiring national security review for certain investments by foreign banks, which are currently subject to certain carveouts under the Bank Act from the application of the Investment Canada Act. Consultations will be held to determine the scope of transactions subject to review
• Amending the Bank Act, Insurance Companies Act and Trust and Loan Companies Act to include a “notice and access” method of delivery of governance documents, while retaining owners’ rights to request delivery by mail

Budget 2025 also notes that the government will move the sunset provision in federal financial institution statutes from the current June 2026 date to June 2033.

For more information on these measures, please contact the authors or any other member of our Financial Services Regulatory group.