Retail Payment Activities Regulations (SOR/2023-229)

Marginal note:Insurance or guarantee

• 14 (1) A payment service provider that holds end-user funds in accordance with paragraph 20(1)(c) of the Act must ensure that the insurance or guarantee referred to in that paragraph is provided by an entity that

  • (a) is referred to in one of paragraphs 9(a) to (h) of the Act or is a foreign financial institution that is regulated by a regulatory regime that imposes standards in respect of capital, liquidity, governance, supervision and risk management comparable to those that apply to those entities; and

  • (b) is not affiliated with the payment service provider within the meaning of section 3 of the Act.

• Marginal note:Conditions

  (2) The payment service provider must ensure that

  • (a) the proceeds from the insurance or guarantee will not form part of the payment service provider’s estate;

  • (b) the proceeds from the insurance or guarantee will be payable for the benefit of end users as soon as feasible following an event referred to in subsection (3);

  • (c) the insurance or guarantee will survive the payment service provider’s insolvency, as well as any compromise or arrangement with the payment service provider’s creditors and any extinguishment of the payment service provider’s obligations to end users, including those resulting from restructuring; and

  • (d) the Bank is notified at least 30 days before any cancellation or termination of the insurance or guarantee.

• Marginal note:Events

  (3) For the purpose of paragraph (2)(b), the events are

  • (a) the bringing by the payment service provider of an insolvency proceeding in respect of itself;

  • (b) the consent by the payment service provider to the bringing of an insolvency proceeding in respect of it; and

  • (c) the passage of 30 days after the day on which an insolvency proceeding is brought in respect of the payment service provider by another individual or entity, unless that insolvency proceeding is discontinued or dismissed in that time.

• Marginal note:Definition of insolvency proceeding

  (4) For the purpose of subsection (3), insolvency proceeding means any proceeding, action, application, case or legal process relating to bankruptcy, insolvency, liquidation, dissolution or winding-up that is commenced in respect of a payment service provider under the law of any jurisdiction.