Vol. 137, No. 13 — June 18, 2003

Registration
SOR/2003-184 29 May, 2003

BANK ACT

Access to Basic Banking Services Regulations

P.C. 2003-765 29 May, 2003

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to subsections 448.1(3) (see footnote a)  and 458.1(2) (see footnote b)  and section 459.4 (see footnote c)  of the Bank Act (see footnote d) , hereby makes the annexed Access to Basic Banking Services Regulations.

definition	ACCESS TO BASIC BANKING SERVICES REGULATIONS
	INTERPRETATION
Definition of "Act"	1. In these Regulations, "Act" means the Bank Act.
	OPENING OF RETAIL DEPOSIT ACCOUNTS
Definition of "point of service"	2. (1) For the purpose of subsection 448.1(1) of the Act, "point of service" means a physical location to which the public has access and at which a member bank carries on business with the public and opens or initiates the opening of retail deposit accounts through natural persons.
Prescribed "points of service"	(2) Every point of service is a prescribed point of service for the purpose of subsection 448.1(1) of the Act.
Refusal to open account	3. (1) Subject to subsection (2), subsection 448.1(1) of the Act does not apply in the following circumstances: (a) if the member bank has reasonable grounds to believe that the retail deposit account will be used for illegal or fraudulent purposes; (b) if the individual has a history of illegal or fraudulent activity in relation to providers of financial services and if the most recent instance of such activity occurred less than seven years before the day on which the request to open a retail deposit account is made; (c) if the member bank has reasonable grounds to believe that the individual, for the purpose of opening the retail deposit account, knowingly made a material misrepresentation in the information provided to the member bank; (d) if the member bank has reasonable grounds to believe that it is necessary to refuse to open the retail deposit account in order to protect the customers or employees of the member bank from physical harm, harassment or other abuse; or (e) if the request is made at a branch or point of service of a member bank at which the only retail deposit accounts offered are those that are linked to an account at another financial institution.
Bankruptcy	(2) For greater certainty and for the purpose of paragraph (1)(a), the fact that the individual is or has been a bankrupt does not, by itself without any evidence of fraud or any other illegal activity in relation to the bankruptcy, constitute reasonable grounds for a member bank to believe that an account for the individual will be used for illegal or fraudulent purposes.
Location	(3) If an individual requests the opening of a retail deposit account at a point of service at which the opening of such an account can only be initiated, the member bank is not required to open the account at that physical location; however, the bank shall, subject to these Regulations, open the account at another physical location.
Conditions to be met	4. (1) Subject to subsection (2) and for the purpose of subsection 448.1(1) of the Act, the conditions to be met by an individual who is requesting that a member bank open a retail deposit account for the individual are as follows: (a) the individual shall present to the member bank (i) two pieces of identification from among those set out in Part A or B of the schedule at least one of which is from among those set out in Part A of the schedule, or (ii) one piece of identification from among those set out in Part A of the schedule, if the identity of the individual is also confirmed by a client in good standing with the member bank or by an individual of good standing in the community where the member bank is situated; (b) the individual shall disclose, orally or in writing, the information listed in Part C of the schedule if the information is not available on the pieces of identification presented by the individual; and (c) if the member bank requests, the individual shall consent to the member bank's verifying whether any of the circumstances set out in paragraphs 3(1)(a) to (d) apply to the individual, and to the member bank's verifying the pieces of identification presented by the individual.
Where bank suspects misrepresentation	(2) If the member bank, based on its verification of the circumstances set out in paragraphs 3(1)(a) to (d) or the pieces of identification, or based on information, if any, provided by the individual that is related to the request, has reasonable grounds to suspect that the individual is misrepresenting their identity, the individual shall present to the member bank one piece of identification from among those set out in Part A of the schedule that bears the individual's photograph and signature.
Written notice	5. If the member bank refuses to open a retail deposit account owing to the existence of any of the circumstances set out in paragraphs 3(1)(a) to (e) or owing to the individual's not meeting the conditions prescribed under these Regulations, the member bank shall provide to the individual, in writing, (a) notice of its refusal to open the account; and (b) a statement indicating that the individual may contact the Agency if they have a complaint and how the individual can contact the Agency.
	CASHING OF CERTAIN GOVERNMENT OF CANADA CHEQUES AND OTHER INSTRUMENTS
Refusal to cash cheque or instrument	6. Subsection 458.1(1) of the Act does not apply in the following circumstances: (a) if there is evidence that the cheque or other instrument has been altered in any way or is counterfeit; (b) if the cheque or other instrument is not an item to be accepted under Rule G8 of the Canadian Payments Association, as amended from time to time; or (c) if the member bank has reasonable grounds to believe that there has been illegal or fraudulent activity in relation to the cheque or other instrument.
Prescribed maximum amount	7. The maximum amount of a cheque or other instrument referred to in subsection 458.1(1) of the Act that a member bank is required by that subsection to cash is $1,500.
Conditions to be met	8. For the purpose of subsection 458.1(1) of the Act, an individual who requests that a member bank cash a cheque or other instrument shall present to the member bank (a) two pieces of identification from among those set out in Part A or B of the schedule; or (b) one piece of identification from among those set out in Part A or B of the schedule if (i) that piece bears the signature and photograph of the individual, or (ii) the identity of the individual is also confirmed by a client in good standing with the member bank or by an individual of good standing in the community where the member bank is situated.
Individual considered not to be a customer	9. For the purpose of subsection 458.1(1) of the Act, an individual is considered not to be a customer of a member bank if the individual does not have a personal deposit account with any branch of the member bank and does not hold a credit card issued by the member bank.
Written notice	10. If the member bank refuses to cash a cheque or other instrument owing to the existence of any of the circumstances set out in section 6 or owing to the individual's not meeting the conditions prescribed under these Regulations, the member bank shall provide to the individual, in writing, (a) notice of the refusal to cash the cheque or other instrument; and (b) a statement indicating that the individual may contact the Agency if they have a complaint and how the individual can contact the Agency.
	GENERAL
	Pieces of Identification
Identification requirements	11. For greater certainty, the pieces of identification required to be presented by an individual under these Regulations shall be original, valid and not substantially defaced.
Different names on identifications	12. If the name shown on one of the pieces of identification presented by an individual differs from the name shown on any other identification presented by the individual, the individual shall provide a certificate evidencing the change of name that has occurred or a certified copy of that certificate.
	Disclosure of Information
Public disclosure relating to opening of accounts	13. A member bank shall display and make available to the public at all of its branches and points of service copies of a written statement disclosing (a) the conditions to be met under these Regulations by an individual who requests the opening of a retail deposit account; and (b) the fact that the individual may contact the Agency if they have a complaint and how the individual can contact the Agency.
Public disclosure relating to cashing of cheques and other instruments	14. A member bank shall display and make available to the public at all of its branches copies of a written statement disclosing (a) the personal identification requirements to be met under these Regulations by an individual, for the purpose of cashing certain Government of Canada cheques and other instruments under subsection 458.1(1) of the Act, who is considered not to be a customer of the member bank; and (b) the fact that the individual may contact the Agency if they have a complaint and how the individual can contact the Agency.
	COMING INTO FORCE
Coming into force	15. These Regulations come into force four months after the day on which they are registered.

SCHEDULE
(Sections 4 and 8)

IDENTIFICATION

PART A

1. A drivers' licence issued in Canada, as permitted to be used for identification purposes under provincial law

2. A Canadian passport

3. A Certificate of Canadian Citizenship or a Certification of Naturalization, in the form of a paper document or card but not a commemorative issue

4. A Permanent Resident card or Citizenship and Immigration Canada Form IMM 1000 or IMM 1442

5. A birth certificate issued in Canada

6. A Social Insurance Number card issued by the Government of Canada

7. An Old Age Security card issued by the Government of Canada

8. A Certificate of Indian Status issued by the Government of Canada

9. A provincial health insurance card, as permitted to be used for identification purposes under provincial law

10. A document or card, bearing the individual's photograph and signature, issued by any of the following authorities or their successors:

• (a) Insurance Corporation of British Columbia
  (b) Alberta Registries
  (c) Saskatchewan Government Insurance
  (d) Department of Service Nova Scotia and Municipal Relations
  (e) Department of Transportation and Public Works of the Province of Prince Edward Island
  (f) Service New Brunswick
  (g) Department of Government Services and Lands of the Province of Newfoundland and Labrador
  (h) Department of Transportation of the Northwest Territories
  (i) Department of Community Government and Transportation of the Territory of Nunavut

PART B

1. An employee identity card, issued by an employer that is well known in the community, bearing the individual's photograph

2. A bank or automated banking machine or client card, issued by a member of the Canadian Payments Association in the name of, or bearing the name of, the individual and bearing the individual's signature

3. A credit card, issued by a member of the Canadian Payments Association in the name of, or bearing the name of, the individual and bearing the individual's signature

4. A Canadian National Institute for the Blind (CNIB) client card bearing the individual's photograph and signature

5. A foreign passport

PART C

1. The individual's name

2. The individual's date of birth

3. The individual's address, if any

4. The individual's occupation, if any

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not a part of the Regulations.)

Description

The Canadian financial services sector has been undergoing rapid change for the better part of a decade. In 1996, the federal government created the Task Force on the Future of the Canadian Financial Services Sector to review and advise on the nature of change taking place in the sector. In 1998, the Task Force issued a report which included numerous conclusions and recommendations. These findings were carefully reviewed by committees of both the House of Commons and the Senate. These committees largely endorsed the findings of the Task Force. Based on the work of the Task Force and the parliamentary committees, the federal government issued a policy paper in June 1999 entitled Reforming Canada's Financial Services Sector: A Framework for the Future. This document served as the policy foundation for Bill C-8, An Act to Establish the Financial Consumer Agency of Canada and to Amend Certain Acts in Relation to Financial Institutions (FCA Act). Bill C-8 received Royal Assent on June 14, 2001.

The FCA Act provides for significant amendments to the laws governing federal financial institutions. As an integrated package, the amendments brought about by the FCA Act promote efficiency and growth in the financial services sector, foster domestic competition, empower and protect consumers of financial services, and improve the regulatory environment for financial institutions.

A key characteristic of the FCA Act is the use of regulations to provide for a more flexible regulatory framework for the financial sector. This allows the government to make modest policy adjustments to the framework in response to significant changes taking place in the global environment in which financial institutions operate. Many regulations are being proposed or modified in order to achieve this policy objective of creating a more flexible regulatory regime.

The remaining amendments bring existing regulations in line with changes made to the financial institutions statutes under the FCA Act.

This is the ninth package of regulations that has been brought forward to complete the policy intent of the FCA Act. The first eight groups of regulations were published in the Canada Gazette, Part II, on October 24, 2001, November 21, 2001, March 13, 2002, April 10, 2002, July 31, 2002, June 19, 2002, July 31, 2002, and October 9, 2002, respectively. A tenth package was published in the Canada Gazette, Part II, on February 26, 2003 and an eleventh package of regulations was pre-published in the Canada Gazette, Part I, on February 15, 2003.

This document discusses the regulatory impact of the following new regulations:

Access to Basic Banking Services Regulations

The legislation requires banks that are members of the Canada Deposit Insurance Corporation to open retail deposit accounts and cash government cheques for any person who meets the requirements set out in the regulations. This is part of the government's objective in Bill C-8 of improving access to basic banking services.

These Regulations define the conditions to be met by an individual to open a retail account and the conditions to be met by a non-customer of a member bank to cash certain federal government cheques. The regulations set out circumstances in which the requirements to open a retail deposit account or cash certain government cheques do not apply. In addition, a member bank must publicly disclose the conditions for opening a retail deposit account or cashing certain government cheques. The regulations also require a bank to provide written notice when it refuses to open a retail deposit account or cash certain government cheques.

Foreign Institutions Subject to the Canadian Residency Requirements Regulations (Insurance Companies) and Foreign Institutions Subject to the Canadian Residency Requirements Regulations (Trust and Loan Companies)

These Regulations allow Canadian insurers and trust and loan companies owned by foreign financial holding companies to meet a requirement that only 50 per cent of their board be Canadian residents, putting these institutions on an equal footing with Canadian insurers and trust and loan companies owned by foreign financial institutions.

It is expected that around 10 regulations will be brought forward for publication within the next few months. These remaining regulations will complete the policy package envisaged by the June 1999 policy paper and the FCA Act.

Alternatives

The enclosed regulations are required in order to bring the policy intent underlying the FCA Act into effect. They are required to round out the implementation of the new policy framework, as outlined in the description. As such, no alternatives to the regulations were considered.

Benefits and Costs

The enclosed regulations are integral to the overall policy objectives of the FCA Act. As such, their cost-benefit justification cannot be separated from the overall costs and benefits of the legislative package itself.

The FCA Act provides an improved regulatory structure that balances the competing interests of stakeholders. While individual legislative measures may impose some burden on a particular stakeholder group, there are overall net benefits for all stakeholders. For example,

- Consumers benefit from strengthened consumer protection measures, a more transparent complaints handling process, and the advantages brought about by increased competition.

- Financial institutions may face modestly increased regulation through enhanced regulatory rules and a strengthened consumer protection regime. However, they benefit from greater organizational flexibility and broader powers. The creation of the Financial Consumer Agency of Canada (FCAC) is expected to have an annual budget of about $7 million, the cost of which will be passed on to financial institutions in the form of allocated assessment.

- The Office of the Superintendent of Financial Institutions (OSFI) may face moderately increased regulatory challenges as a result of provisions intended to encourage new entrants, but the potential cost is offset by improved prudential regulatory powers and increased competition. The exact cost implications for OSFI of the legislative package are not easily calculable. The transfer of responsibility for administering the consumer provisions of the financial institutions legislation to the FCAC will reduce OSFI's costs. The relaxed new entrant requirements may increase OSFI's workload and costs, some of which will be borne by the new entrants. However, the streamlined approval process will reduce the cost of regulation and cost burden directly borne by financial institutions. In all, it is expected that OSFI's cost of regulation will not increase substantially.

Each of the regulations included in this and subsequent packages is intended to implement a specific aspect of the overall policy structure introduced by the FCA Act. The regulations may either be beneficial, cost/benefit neutral, or impose a burden on one or more relevant stakeholder groups. Since the weighing of costs and benefits has been done at the legislative level, the regulations must be examined in light of their contribution to the balance of the overall policy framework that was approved in the FCA Act.

While most regulations merely round out the policy intention of a provision in the legislation, in a few cases the scope of the burden borne by a stakeholder group is at least partially determined by the regulations. In this regard, we note the Access to Basic Banking Services Regulations. These Regulations implement part of the stated public policy objective of Bill C-8 with respect to improving access to basic banking services. The regulations are not expected to impose significant additional costs on institutions since many substantially comply with modalities of the regulations based on previous commitments made by the banking sector in 1997. There are also basic requirements imposed on consumers in the form of basic identification requirements, which are necessary to combat fraud, money laundering and terrorist financing.

Consultation

The FCA Act and its related regulations are part of a policy development process dating back to 1996. At every stage of the process, stakeholders have been consulted. More recently, working drafts of the enclosed regulation were shared with stakeholders and, wherever feasible, their comments have been reflected in revisions. The following organizations were consulted:

•  Action Réseau Consommateur (Fédération nationale des Associations de consommateurs du Québec)
•  Bourse de Montréal
•  Canadian Bankers Association
•  Canadian Community Reinvestment Coalition
•  Canadian Life and Health Insurance Association
•  Canadian Securities Administrators
•  ComTel (TelPay)
•  Consumers' Association of Canada
•  CPA Stakeholders Advisory Council
•  Credit Union Central of Canada
•  Democracy Watch
•  Fédération des caisses Desjardins
•  Insurance Bureau of Canada
•  Insurance Consumer's Group
•  Interac Association
•  Investment Dealers Association of Canada
•  Investment Funds Institute of Canada
•  Mutual Fund Dealers Association
•  National Anti-Poverty Organization
•  Option Consommateurs
•  Public Interest Advocacy Centre
•  Service d'aide aux consommateurs/Consumer Aid Services

Due to extensive consultations prior to pre-publication, the Department of Finance received just four (4) written submissions following publication of the Access to Basic Banking Services Regulations in the Canada Gazette, Part I, on November 30, 2002. No comments were received in respect of the Canadian Residency Requirement Regulations.

Responding to comments received, the following changes have been made to clarify the Access to Basic Banking Services Regulations:

•  The grounds to refuse to open an account on the basis of a history of illegal or fraudulent activity in relation to providers of financial services was further clarified to specify that the last instance of illegal activity must have occurred less than 7 years prior to the date of the request to open the account.

•  As the regulations are intended to apply only to branches or points of service that open or initiate account openings through a natural person (as opposed to accounts that are opened through the clearing of a cheque), the regulations clarify that a member bank is not required to open an account at any of its branches or points of service if the only accounts offered by the bank at that branch or point of service are accounts that are linked to an account at another financial institution.

•  The regulations also expand on the requirements at a point of service where a bank only initiates the opening of a retail deposit. The Regulations make clear that a bank is not required to open an account at such a location; however, the bank shall, subject to the regulations, open the account at another location.

•  The provision in the schedule concerning personal identification cards, issued by a provincial government authority or agent for purposes of identification, was changed to describe and list in detail the acceptable provincial cards or documents.

Technical amendments were also made to the regulations. For example, the definition of point of service in section 2 was reworded. Sections 5 and 10 now refer to the conditions under these Regulations in order to include the specific requirements relating to pieces of identification in sections 11 and 12.

Compliance and Enforcement

OSFI will be responsible for ensuring compliance with prudential aspects of the regulations. The Financial Consumer Agency of Canada will be responsible for ensuring compliance with consumer-related regulations.

Contact

• Gerry Salembier
  Director, Financial Institutions Division
  Financial Sector Policy Branch
  Department of Finance
  L'Esplanade Laurier, 15th Floor, East Tower
  140 O'Connor Street
  Ottawa, Ontario
  K1A 0G5
  Telephone: (613) 992-1631
  FAX: (613) 943-1334

Footnote a 

S.C. 2001, c. 9, s. 117

Footnote b 

S.C. 2001, c. 9, s. 123

Footnote c 

S.C. 2001, c. 9, s. 125

Footnote d 

S.C. 1991, c. 46

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