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Bank Act (S.C. 1991, c. 46)

Full Document:  

Act current to 2022-06-01 and last amended on 2022-02-26. Previous Versions

PART XII.1Authorized Foreign Banks (continued)

Business and Powers (continued)

Marginal note:Application of certain provisions

  •  (1) The provisions of this Act that apply in respect of an authorized foreign bank apply in respect of an authorized foreign bank that is subject to the restrictions and requirements referred to in subsection 524(2), with any modifications that may be required to take into account those restrictions and requirements.

  • Marginal note:Non-application of certain provisions

    (2) The following provisions do not apply in respect of an authorized foreign bank that is subject to the restrictions and requirements referred to in subsection 524(2):

    • (a) sections 545 and 546; and

    • (b) sections 559 to 566.

  • 1991, c. 46, s. 541
  • 1996, c. 6, s. 16
  • 1999, c. 28, s. 35

Marginal note:Guarantees and acceptances

 An authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2) may, in respect of its business in Canada, guarantee any securities and accept any bills of exchange that are issued by any person and intended by the issuer or any party to be sold or traded.

  • 1999, c. 28, s. 35

Marginal note:Payment clearing and settlement

 Subject to section 22.1 of the Payment Clearing and Settlement Act, an authorized foreign bank may be a participant in a clearing and settlement system designated under subsection 4(1) of that Act.

  • 1991, c. 46, s. 542
  • 1996, c. 6, s. 17
  • 1999, c. 28, s. 35
  • 2014, c. 39, s. 375

Marginal note:Networking

  •  (1) Subject to sections 540, 546 and 549, an authorized foreign bank may, in Canada,

    • (a) act as agent for any person in respect of the provision of any service that is provided by a financial institution, an entity in which a bank is permitted to acquire a substantial investment under section 468 or a Canadian entity acquired or held under section 522.08 and may enter into an arrangement with any person in respect of the provision of that service; or

    • (b) refer any person to any such financial institution or entity.

  • Marginal note:Regulations

    (2) The Governor in Council may make regulations respecting the disclosure of

    • (a) the name of the principal for whom an authorized foreign bank is acting as agent pursuant to subsection (1); and

    • (b) whether any commission is being earned by an authorized foreign bank when acting as agent pursuant to subsection (1).

  • 1991, c. 46, s. 543
  • 1996, c. 6, s. 17
  • 1999, c. 28, s. 35
  • 2001, c. 9, s. 142
  • 2007, c. 6, s. 84

 [Repealed, 1999, c. 28, s. 35]

Marginal note:Restriction on fiduciary activities

 No authorized foreign bank shall act in Canada as

  • (a) an executor, administrator or official guardian or a guardian, tutor, curator, judicial adviser or committee of a mentally incompetent person; or

  • (b) a trustee for a trust.

  • 1991, c. 46, s. 544
  • 1996, c. 6, s. 17
  • 1999, c. 28, s. 35

Marginal note:Deposits that fall below $150,000

  •  (1) An authorized foreign bank shall, in respect of its business in Canada, ensure that, on each day that is at least thirty days after the date of the order under subsection 534(1) made in respect of it,

    A/B ≤ 0.01

    where

    A
    is the sum of all amounts each of which is the sum of all the deposits held by the authorized foreign bank at the end of a day in the preceding thirty days each of which deposits is less than $150,000 and payable in Canada; and
    B
    is the sum of all amounts each of which is the sum of all deposits held by the authorized foreign bank at the end of a day in those preceding thirty days and payable in Canada.
  • Marginal note:Exchange rate

    (2) For the purpose of subsection (1), the rate of exchange that shall be applied on any day in determining the amount in Canadian dollars of a deposit in a currency of a country other than Canada shall be determined in accordance with any regulations that may be made.

  • Meaning of deposit

    (3) For the purpose of subsection (1), deposit has the meaning that would be given to it by the schedule to the Canada Deposit Insurance Corporation Act for the purposes of deposit insurance if that schedule were read without reference to subsections 2(2), (5) and (6) of that schedule, but does not include prescribed deposits.

  • Marginal note:Notice before opening account or providing prescribed product

    (4) Before an authorized foreign bank opens a deposit account in Canada or provides in Canada any prescribed product that relates to a deposit, the authorized foreign bank shall, at the prescribed time and place and in the prescribed form and manner, give the person requesting the opening of the account or the provision of the product

    • (a) a notice in writing that the deposits to the deposit account, or that the deposit that relates to the prescribed product, as the case may be, will not be insured by the Canada Deposit Insurance Corporation or, if the request is made by telephone, a verbal notice to that effect; and

    • (b) any other information that may be prescribed.

  • Marginal note:Other notice

    (5) An authorized foreign bank shall, in accordance with the regulations,

    • (a) post notices at all of its branches, and at prescribed points of service, in Canada where deposits are accepted, and on all of its websites at which deposits are accepted in Canada, to inform the public that deposits with the authorized foreign bank are not insured by the Canada Deposit Insurance Corporation; and

    • (b) include in its advertisements notices to inform the public that deposits with the authorized foreign bank are not insured by the Canada Deposit Insurance Corporation.

  • Marginal note:Regulations

    (6) The Governor in Council may make regulations

    • (a) respecting the determination of rates of exchange referred to in subsection (2);

    • (a.1) prescribing the deposits referred to in subsection (3) and the terms and conditions with respect to the acceptance of those deposits;

    • (b) prescribing the time and place at which and the form and manner in which notices referred to in subsection (4) are to be given and the other information to be contained in the notices; and

    • (c) respecting notices referred to in subsection (5).

  • 1991, c. 46, s. 545
  • 1996, c. 6, s. 17
  • 1999, c. 28, s. 35
  • 2007, c. 6, s. 85
  • 2012, c. 5, s. 61

Marginal note:Deposits less than $150,000

  •  (1) Subject to the regulations, an authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2) may not, in respect of its business in Canada, act as agent for any person in the taking of a deposit that is less than $150,000 and payable in Canada.

  • Meaning of deposit

    (2) In this section, deposit has the meaning assigned to that term by subsection 545(3).

  • Marginal note:Regulations

    (3) The Governor in Council may make regulations respecting the circumstances in which, and the conditions under which, an authorized foreign bank referred to in subsection (1) may act as agent for any person in the taking of a deposit that is less than $150,000 and payable in Canada.

  • 1991, c. 46, s. 546
  • 1996, c. 6, s. 18
  • 1999, c. 28, s. 35
  • 2001, c. 9, s. 143

Marginal note:Shared premises

  •  (1) Subject to the regulations, no authorized foreign bank shall carry on business in Canada on premises that are shared with those of a member institution, within the meaning of section 2 of the Canada Deposit Insurance Corporation Act, that is affiliated with the authorized foreign bank.

  • Marginal note:Limitation

    (2) Subsection (1) only applies in respect of premises or any portion of premises on which both the authorized foreign bank and the member institution carry on business with the public and to which the public has access.

  • Marginal note:Adjacent premises

    (3) Subject to the regulations, no authorized foreign bank shall carry on business in Canada on premises that are adjacent to a branch or office of a member institution, within the meaning of section 2 of the Canada Deposit Insurance Corporation Act, that is affiliated with the authorized foreign bank, unless the authorized foreign bank clearly indicates to its customers that its business and the premises on which it is carried on are separate and distinct from the business and premises of the affiliated member institution.

  • Marginal note:Regulations

    (4) The Governor in Council may make regulations

    • (a) respecting the circumstances in which, and the conditions under which, an authorized foreign bank may carry on business in Canada on premises that are shared with those of a member institution referred to in subsection (1); and

    • (b) respecting the circumstances in which, and the conditions under which, an authorized foreign bank may carry on business in Canada on premises that are adjacent to a branch or office of a member institution referred to in subsection (3).

  • 1991, c. 46, s. 547
  • 1996, c. 6, s. 19(E)
  • 1999, c. 28, s. 35
  • 2001, c. 9, s. 144

Marginal note:Restriction on securities activities

 An authorized foreign bank shall not deal in Canada in securities to the extent prohibited or restricted by any regulations that the Governor in Council may make for the purposes of this section.

  • 1991, c. 46, s. 548
  • 1999, c. 28, s. 35

Marginal note:Restriction on insurance business

  •  (1) An authorized foreign bank shall not undertake in Canada the business of insurance except to the extent permitted by this Act or the regulations.

  • Marginal note:Restriction on acting as agent

    (2) An authorized foreign bank shall not act in Canada as agent for any person in the placing of insurance and shall not lease or provide space in any branch in Canada of the authorized foreign bank to any person engaged in the placing of insurance.

  • Marginal note:Regulations

    (3) The Governor in Council may make regulations respecting the matters referred to in subsection (1) and regulations respecting relations between authorized foreign banks and

    • (a) entities that undertake the business of insurance; or

    • (b) insurance agents or insurance brokers.

  • Marginal note:Saving

    (4) Nothing in this section precludes an authorized foreign bank from

    • (a) requiring insurance to be placed by a borrower for the security of the authorized foreign bank; or

    • (b) obtaining group insurance for its employees.

  • Definition of business of insurance

    (5) In this section, business of insurance includes

    • (a) the issuance of any annuity if the liability in respect of the annuity is contingent on the death of a person; and

    • (b) the issuance of any debt obligation, any of whose terms and conditions are established on the basis of mortality considerations, under which the issuer is obliged to make periodic payments.

  • 1991, c. 46, s. 549
  • 1999, c. 28, s. 35
  • 2012, c. 19, s. 207

Marginal note:Restriction on leasing

 An authorized foreign bank shall not engage in Canada in any personal property leasing activity in which a financial leasing entity as defined in subsection 464(1) is not permitted to engage.

  • 1991, c. 46, s. 550
  • 1999, c. 28, s. 35
  • 2001, c. 9, s. 145

Marginal note:Restriction on residential mortgages

  •  (1) An authorized foreign bank shall not make a loan in Canada on the security of residential property in Canada for the purpose of purchasing, renovating or improving that property, or refinance a loan for that purpose, if the amount of the loan, together with the amount outstanding of any mortgage having an equal or prior claim against the property, would exceed 80 per cent of the value of the property at the time of the loan.

  • Marginal note:Exception

    (2) Subsection (1) does not apply in respect of

    • (a) a loan made or guaranteed under the National Housing Act or any other Act of Parliament by or under which a different limit on the value of property on the security of which the authorized foreign bank may make a loan is established;

    • (b) a loan if repayment of the amount of the loan that exceeds the maximum amount set out in subsection (1) is guaranteed or insured by a government agency or a private insurer approved by the Superintendent;

    • (c) the acquisition by the authorized foreign bank from an entity of securities issued or guaranteed by the entity that are secured on any residential property, whether in favour of a trustee or otherwise, or the making of a loan by the authorized foreign bank to the entity against the issue of those securities; or

    • (d) a loan secured by a mortgage where

      • (i) the mortgage is taken back by the authorized foreign bank on a property disposed of by it, including where the disposition is by way of a realization of a security interest, and

      • (ii) the mortgage secures payment of an amount payable to the authorized foreign bank for the property.

  • 1991, c. 46, s. 551
  • 1999, c. 28, s. 35
  • 2007, c. 6, s. 86

Marginal note:Restriction on charges to borrowers

  •  (1) Subject to any regulations made under subsection (2), an authorized foreign bank that has obtained insurance or a guarantee against default on a loan made in Canada on the security of residential property shall not charge a borrower an amount for the insurance or guarantee that exceeds the actual cost to the authorized foreign bank of the insurance or guarantee.

  • Marginal note:Regulations

    (2) The Governor in Council may make regulations

    • (a) respecting the determination of the actual cost to an authorized foreign bank for the purposes of subsection (1);

    • (b) respecting the circumstances in which an authorized foreign bank is exempt from the application of subsection (1);

    • (c) respecting, in relation to insurance or a guarantee against default on a loan made by an authorized foreign bank in Canada on the security of residential property,

      • (i) the arrangements into which the authorized foreign bank, its representatives and its employees may or may not enter, and

      • (ii) the payments or benefits that the authorized foreign bank, its representatives and its employees may or may not accept from an insurer or the insurer’s affiliates; and

    • (d) respecting any other matters necessary to carry out the purposes of subsection (1).

  • Marginal note:Regulations — disclosure

    (3) The Governor in Council may make regulations respecting the disclosure by an authorized foreign bank of information relating to insurance or a guarantee against default on a loan made by the authorized foreign bank in Canada on the security of residential property, including regulations respecting

    • (a) the information that must be disclosed, including information relating to

      • (i) the person who benefits from the insurance or guarantee,

      • (ii) the arrangements between the authorized foreign bank, its representatives or its employees and the insurer or the insurer’s affiliates, and

      • (iii) the payments and benefits that the authorized foreign bank, its representatives and its employees accept from an insurer or the insurer’s affiliates;

    • (b) the time and place at which, the form and manner in which and the persons to whom information is to be disclosed; and

    • (c) the circumstances under which an authorized foreign bank is not required to disclose information.

  • 1999, c. 28, s. 35
  • 2001, c. 9, s. 146
  • 2009, c. 2, s. 273
  • 2012, c. 5, s. 62(E)
 
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