2026 Federal Budget: Financial Sector Highlights

On November 5, 2026, Canada’s Minister of Finance tabled the federal government’s 2026 budget (Budget 2026).

Budget 2026 builds on the government's existing reforms to Canada's financial sector, including consumer-driven banking, payments modernization and the new stablecoin framework. It proposes a range of new measures, most notably transferring responsibility for anti-money laundering supervision of federally regulated financial institutions (FRFIs) from the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to the Office of the Superintendent of Financial Institutions (OSFI), strengthening financial consumer protection and anti-fraud requirements, and modernizing the deposit insurance framework. It also proposes measures to facilitate market entry and enhance competition in the financial sector.

Stablecoins

Following the enactment of the Stablecoin Act, and alongside ongoing consultations on its proposed regulations, Budget 2026 proposes to amend FRFI legislation that would prohibit FRFIs from issuing stablecoins directly. FRFIs would instead be required to issue stablecoins through non-financial institution subsidiaries regulated under the Stablecoin Act.

The Stablecoin Act would also be extended to foreign institutions that are not prudentially regulated in Canada and amended to clarify that issuing a stablecoin does not constitute engaging in the business of accepting deposits for foreign banks and their affiliates regulated under Part XII of the Bank Act. The government has indicated that it will continue to engage with stakeholders on consumer protection measures that could be implemented in the event of issuer or custodian insolvency.

Anti-Money Laundering Reforms

In Budget 2026, the government announced its intention to transfer responsibility for anti-money laundering (AML) and anti-terrorist financing supervision of FRFIs from FINTRAC to OSFI and to enable information sharing between the two regulators. The government has not provided further details regarding the timeline for this significant reform.

Over the past year, the government has passed measures to ensure the AML regime reflects the current risk environment, including stronger enforcement and penalty powers for FINTRAC in Bill C-12. Similarly, on November 3, 2026, the government tabled Bill S-8, which introduced new AML-related offences, including the operation of a crypto-ATM without a provincial licence and the acceptance of cash transactions exceeding C$10,000 by any business, including money services businesses (MSBs), subject to limited exemptions for banks and other deposit-taking institutions.

Building on this focus, Budget 2026 proposes further amendments to the AML regime to:

• Clarify the scope of FINTRAC’s examination powers and ability to obtain information from reporting entities
• Extend the AML regime to higher-risk gambling activities, including certain pari-mutuel betting on horse racing
• Expand registration requirements to additional sectors, including dealers in precious metals and stones
• Amend federal corporate statutes to provide the government with access to non-public beneficial ownership information and enhance powers to dissolve fraudulent corporations

Payments Modernization

Budget 2026 notes the launch of the Real-Time Rail (RTR) on November 9, 2026, and announces the next phase of payments modernization, including:

• A public consultation expected in early 2027 on future priorities and the statutory review of the Canadian Payments Act
• Targeted amendments to the Retail Payment Activities Act to enhance the Bank of Canada’s supervision of payment service providers (PSPs)
• Alignment with provincial and territorial regimes to harmonize consumer protection requirements for PSPs
• A pilot project for voluntary digital credentials in financial services to help combat identity fraud

Separately, the Bank of Canada announced that it has designed the RTR as a prominent payment system under the Payment Clearing and Settlement Act.

Canada and the European Union have committed to supporting the connection of their instant payment systems and to launching a joint working group to explore further opening their markets to their respective banks, insurers and fintech companies.

The Bank of Canada has also launched consultation on the draft supervisory guidelines related to accreditation for consumer-driven banking.

Anti-Fraud Framework

As part of the broader National Anti-Fraud Strategy, the government will consult on amendments to the Bank Act to cap consumer liability at C$0 for unauthorized transactions across all account types, absent gross negligence by the consumer, extending the existing cap for unauthorized credit card transactions. Budget 2026 also proposes a legislated Multi-Sector Anti-Fraud Framework requiring organizations in the financial, telecommunications and digital platform sectors to prevent, detect, disrupt and respond to fraud and to cooperate across sectors to resolve fraud-related complaints.

Financial Consumer Protection

Budget 2026 includes several consumer-facing measures that will require operational attention from banks and other lenders:

• Financial Consumer Agency of Canada Act: Amendments to better reflect the agency’s role in complaints handling, confirm consumers’ entitlement to redress where interest is unpaid or incorrectly credited, and streamline approvals for information-sharing agreements. The government is also negotiating with banks the terms of a Code of Conduct for the Prevention of Economic Abuse, with oversight from the Financial Consumer Agency of Canada.
• Fee statements: Issuing regulations requiring banks to provide a single, clear annual statement of fees paid on chequing and savings accounts, consistent with requirements in the European Union and United Kingdom.
• Credit card payment allocation: Launching a consultation on legislative amendments that would require credit card payments above the minimum balance to be applied first to balances carrying the highest interest rate, as is currently the case in Quebec.
• Payday loans: Making amendments to the payday lending exemption in section 347.1 of the Criminal Code to require a minimum 42-day term and repayment in instalments, and to prohibit credit insurance charges.
• Branch closures: Introducing amendments to the Bank Act requiring banks to publish branch closure notices online, waive fees for closing or transferring affected accounts and authenticate government-issued identification for remote account opening.
• Mortgages: Introducing regulations for the Bank of Canada to publish insured mortgage rate information; establishing a Canada Revenue Agency (CRA) income verification service for mortgage lenders and insurers; raising the price limit for optional mortgage insurance from C$1-million to C$1.5-million, with 30-year amortizations for first-time buyers or new builds; and consultation on prepayment penalty transparency.

Deposit Insurance Modernization

Building on the measures described in the 2025 Deposit Insurance Review: Consultation Paper, Budget 2026 proposes amendments to the Canada Deposit Insurance Corporation Act to, among other things:

• Increase the deposit insurance limit to C$250,000
• Provide temporary high-balance coverage for certain life events, such as the sale of a home
• Remove the limit for eligible deposits in registered and tax-free accounts
• Legislate a review of the framework every 10 years
• Provide that provincial trust and loan companies may become members of the Canadian Deposit Insurance Corporation by continuing as federal trust and loan companies

Other Measures

Budget 2026 introduces several other reforms relevant to the financial sector, including:

• Competition in the financial sector: Budget 2026 proposes amendments to the Office of the Superintendent of Financial Institutions Act to introduce a secondary competition objective for OSFI, supported by statutory interpretive principles. The stated intent is to ensure that competition considerations, such as proportionality, compliance burden and market impacts, are more clearly and consistently reflected in how OSFI regulates and supervises FRFIs. The government also intends to issue a policy statement from the Minister of Finance providing guidance on how ministerial tools may be used to support entry of FRFIs, including credit union continuance.
• National security divestiture powers: Budget 2026 proposes to amend the Bank Act to give the Minister of Finance the authority to order the divestiture of investments in Canadian businesses held by banks, bank holding companies and foreign banks and their affiliates to address national security risks, with a supporting information-gathering authority.
• Bank ownership thresholds: The government intends to introduce amendments to the Bank Act to raise the equity threshold at which a bank must become widely held from C$12-billion to C$25-billion, and to exempt foreign bank subsidiaries with less than C$8-billion in equity from the 35% public holding requirement, provided the foreign parent is widely held and listed on a recognized foreign stock exchange.
• Federal credit unions: The government intends to introduce amendments to the Bank Act to provide greater flexibility for qualifying cooperative shareholders to invest in and control a federal credit union, subject to ministerial approval, to help federal credit unions access capital and pursue growth opportunities.
• Streamline application timelines: The government will introduce amendments to FRFI legislation to establish a maximum statutory one-year timeline for decisions on applications from prospective entrants.

Next Steps

Many of the proposed reforms will have a significant impact on the operations of FRFIs, PSPs, fintechs and other financial sector participants. However, the timelines for implementing these reforms will depend on the outcomes of public consultations and the passage of implementing legislation and regulation.

Businesses in the financial sector should monitor the forthcoming budget implementation legislation and consider participating in the consultations, particularly on payments modernization, the Anti-Fraud Framework and stablecoin consumer protections.

For further information, please contact the authors or any member of our Financial Services Regulatory group.