What Budget 2025 Means for Canada’s Financial Services Sector

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On November 4, 2025, Canada’s Minister of Finance tabled Canada Strong: Budget 2025 (“the Budget”). With respect to Canada’s financial services sector, the government’s overarching message is that a more supportive regulatory environment can catalyze private lending, inject much-needed capital into our economy and ultimately foster economic growth. To that end, Ottawa is committing to improved co-ordination between the Department of Finance and financial regulators, including the Office of the Superintendent of Financial Institutions (“OSFI”), the Bank of Canada and the Financial Consumer Agency of Canada (“FCAC”), when its new rules and regulations are proposed and brought forward.^[1]

Below are some of the key measures announced in the Budget as it relates to Canada’s financial services sector.

Enhancing Consumer Portability and Choice

The Budget proposes measures to make it easier and less costly for Canadians to switch financial institutions. By spring 2026, draft regulations will prohibit certain account-transfer fees, such as charges for moving investment or registered accounts, and will require banks to complete transfers promptly. The Department of Finance will also review service fees, including Interac e-Transfer and ATM fees, and improve transparency for cross-border transfer costs.^[2]

Amendments to the Bank Act will update the branch-closure regime to enhance notice requirements and protect affected customers when a bank shutters a local branch. Under the proposed amendments, banks will need to post public notice of closures online and, from the announcement date until 12 months after closure, will be barred from charging customers fees related to switching or closing accounts.^[3]

New Options for Credit Unions

The Budget announces that legislative amendments to the Bank Act and Canada Deposit Insurance Corporation Act will be forthcoming to make it easier for credit unions, which are provincially regulated, to transition into the federal regulatory regime and for existing federal credit unions to grow and achieve scale. By easing entry into the federal system, strong regional credit unions may look to expand nationally, increasing competition. At the same time, federal credit unions will have more latitude to expand their member base or amalgamate under the federal regime.^[4]

Open Banking and Payment Modernization

After years of consultation, the government intends to move forward with the Consumer-Driven Banking Act, which will formally establish an open-banking framework in Canada. The Act will allow consumers and businesses to securely share their financial data with third-party fintech providers, encouraging innovation and competition in retail banking.

The Bank of Canada will oversee open-banking implementation, building on its new supervisory role under the Retail Payment Activities Act, which now governs approximately 1,500 registered payment service providers. The Budget sets a timeline for “write access” functionality by mid-2027, enabling authorized third parties, subject to consumer consent, to initiate transactions on a customer’s behalf.^[5]

This functionality will coincide with the launch of Canada’s new Real-Time Rail payment system. Together, these reforms are expected to expand digital-payment options and create a more integrated financial technology ecosystem.

Stablecoins and Digital Currency

Budget 2025 signals a major policy shift in how Canada will regulate stablecoins. The government intends to introduce legislation to govern the issuance of fiat-backed stablecoins, requiring issuers to maintain one-to-one reserves and meet prudential and consumer-protection standards.^[6] This is to ensure that a stablecoin can reliably be redeemed one-for-one for its reference fiat currency (e.g., Canadian dollars).

These changes would move Canada toward alignment with global approaches that treat stablecoins as legitimate payment instruments, provided they are properly backed and supervised. Notably, stablecoins have increasingly been used for cross-border transactions and within cryptocurrency ecosystems, but regulators worldwide have warned of their risks to consumers and financial stability if not properly backed with sufficient prudential regulation.

AI and Technology in Financial Services

The Budget announces the government’s plans to explore options and work with the private sector to encourage the adoption of AI in financial services in ways that advance innovation responsibly and build public trust.^[7]

While details are thin in the budget document, future policy changes may involve regulatory consideration for AI use in areas like credit scoring, fraud detection or customer service. The emphasis on trust suggests attention will be paid to ethical AI and alignment with forthcoming federal AI and data governance legislation.

Strengthening Anti-Money Laundering and Financial Crimes Enforcement

The Budget announces the creation of a new Financial Crimes Agency, which will serve as Canada’s lead enforcement body for money-laundering and financial-crime investigations. The agency will consolidate enforcement powers currently dispersed among police and regulators and is described as a “best-in-class” model combining civilian and law-enforcement expertise.

The Financial Crimes Agency’s creation was first announced in October 2025 and is reinforced in the Budget with a commitment to introduce stand-up legislation by spring 2026.^[8]

In addition, the Budget proposes amending the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to “better identify” businesses and professionals with anti-money laundering (“AML”) obligations, increase penalties for non-compliance and introduce a new compliance agreement framework, which suggests the introduction of negotiated agreements with non-compliant entities to remediate issues in lieu of immediate penalties or prosecution.^[9]

Limits on Cash Transactions

One of the most striking AML measures in Budget 2025 is the move to outlaw specific forms of cash transactions that are, according to the government, commonly abused for money laundering. The government will amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to “restrict the acceptance of: (i) cash deposits from one person into the account of another person; and (ii) a cash payment, donation or deposit of $10,000 or more.” In plain terms, once this is law, it will no longer be legal for reporting entities to accept large, anonymous cash transactions above the $10,000 threshold or any third-party cash deposits.^[10]

Currently, Canadian law requires reporting of cash transactions over $10,000 to FINTRAC, but does not prohibit them. If implemented, financial institutions will need to implement controls to reject such transactions at the source.

Raising the Public-Ownership Threshold for Banks

Section 385 of the Bank Act currently requires a widely held ownership structure (dispersed voting shares among public investors) once a bank exceeds a certain size, to prevent undue control by any single owner. The Budget signals the government’s intention to raise the asset threshold for triggering the 35% public shareholding requirement from $2 billion to $4 billion. This means a growing bank or federally incorporated fintech can become twice as large as they are now, while still being closely held and before needing to issue public shares.^[11]

With OSFI’s recent granting of federal banking licences to privately held fintech companies, this change may support new entrants into Canada’s retail and commercial banking market and delay such entrants’ costly compliance with public company requirements until the institution is more mature.

Extending the Sunset of Canada’s Financial Services Sector Legislation

Certain federal financial institution statutes, including the Bank Act, Insurance Companies Act and the Trust and Loan Companies Act, contain a “sunset” clause that mandates a legislative review every five years. The current sunset date was June 30, 2025, previously extended to 2026.

The Budget confirms the government’s intention to renew the sunset provision for a further 7 years, to June 30, 2033. This extension will be implemented through legislation before the current deadline. In effect, this change will allow federally regulated banks, insurers and trust companies to continue operating under the existing legislation beyond 2026 and sets a new horizon for the next comprehensive review of Canada’s financial legislative framework.^[12]

Financial Services and Pan-Canadian Free Trade

The Budget signals that the federal government and provinces have reached a tentative agreement to include a new financial services chapter within the Canadian Free Trade Agreement.^[13] The inclusion of such a chapter will seek to promote a more open and portable financial services sector across Canada for businesses and consumers.

Regulatory Co-ordination and OSFI’s Expanded Role

The Budget underscores the government’s intention to streamline oversight across Canada’s financial system. OSFI will gain expanded authority to share and receive information with other federal agencies regarding integrity and security risks, including cyber threats or foreign-influenced activities.^[14]

The Budget also announces that Canada will add FINTRAC as a member of the Financial Institutions Supervisory Committee (“FISC”). FISC is a statutory committee chaired by the Deputy Minister of Finance, comprising OSFI, the Bank of Canada, the Canada Deposit Insurance Corporation (the deposit insurer) and the Financial Consumer Agency of Canada. It meets regularly to share information and co-ordinate policy actions regarding banks and federally regulated financial institutions. By including FINTRAC in FISC, the government will formally bring AML intelligence into those discussions.^[15]

Concluding Thoughts

For the financial services sector, the Budget offers some optimism that the government will embrace a more innovation-friendly framework for financial services that reduces overall regulatory burden on banks and businesses, while maintaining Canada’s strong macroprudential regulatory policy. Beyond the opportunities, there are significant measures hinted at in the Budget that will pose real and significant challenges for banks and financial services companies to navigate as details and legislative proposals become clearer in the coming weeks and months.

The Financial Services Group at Aird & Berlis LLP will continue to monitor developments as the government brings forward its Budget implementation legislation. If you have questions regarding Budget 2025, please contact the author or a member of the group.

^[1] Budget at page 121.