Bank Act (S.C. 1991, c. 46)

Marginal note:Reliance on information

406 A bank and any person who is a director or an officer, employee or agent of the bank may rely on any information contained in a declaration required by the directors pursuant to section 405 or on any information otherwise acquired in respect of any matter that might be the subject of such a declaration, and no action lies against the bank or any such person for anything done or omitted to be done in good faith in reliance on any such information.

407 [Repealed, 1994, c. 47, s. 23]

Marginal note:Competition Act

408 Nothing in, or done under the authority of, this Act affects the operation of the Competition Act.

PART VIIIBusiness and Powers

General Business

Marginal note:Main business

• 409 (1) Subject to this Act, a bank shall not engage in or carry on any business other than the business of banking and such business generally as appertains thereto.

• Marginal note:Idem

  (2) For greater certainty, the business of banking includes

  • (a) providing any financial service;

  • (b) acting as a financial agent;

  • (c) providing investment counselling services and portfolio management services; and

  • (d) issuing payment, credit or charge cards and, in cooperation with others including other financial institutions, operating a payment, credit or charge card plan.

Marginal note:Additional activities

• 410 (1) In addition, a bank may

  • (a) hold, manage and otherwise deal with real property;

  • (b) provide prescribed bank-related data processing services;

  • (c) outside Canada or, with the prior written approval of the Minister, in Canada, engage in any of the following activities, namely,

    • (i) collecting, manipulating and transmitting

      • (A) information that is primarily financial or economic in nature,

      • (B) information that relates to the business of a permitted entity, as defined in subsection 464(1), or

      • (C) any other information that the Minister may, by order, specify,

    • (ii) providing advisory or other services in the design, development or implementation of information management systems,

    • (iii) designing, developing or marketing computer software, and

    • (iv) designing, developing, manufacturing or selling, as an ancillary activity to any activity referred to in any of subparagraphs (i) to (iii) that the bank is engaging in, computer equipment integral to the provision of information services related to the business of financial institutions or to the provision of financial services;

  • (c.1) with the prior written approval of the Minister, develop, design, hold, manage, manufacture, sell or otherwise deal with data transmission systems, information sites, communication devices or information platforms or portals that are used

    • (i) to provide information that is primarily financial or economic in nature,

    • (ii) to provide information that relates to the business of a permitted entity, as defined in subsection 464(1), or

    • (iii) for a prescribed purpose or in prescribed circumstances;

  • (c.2) engage, under prescribed terms and conditions, if any are prescribed, in specialized business management or advisory services;

  • (d) promote merchandise and services to the holders of any payment, credit or charge card issued by the bank;

  • (e) engage in the sale of

    • (i) tickets, including lottery tickets, on a non-profit public service basis in connection with special, temporary and infrequent non-commercial celebrations or projects that are of local, municipal, provincial or national interest,

    • (ii) urban transit tickets, and

    • (iii) tickets in respect of a lottery sponsored by the federal government or a provincial or municipal government or an agency of any such government or governments;

  • (f) act as a custodian of property;

  • (g) act as receiver, liquidator or sequestrator; and

  • (h) provide identification, authentication or verification services.

• Marginal note:Restriction

  (2) Except as authorized by or under this Act, a bank shall not deal in goods, wares or merchandise or engage in any trade or other business.

• Marginal note:Regulations

  (3) The Governor in Council may make regulations

  • (a) respecting what a bank may or may not do with respect to the carrying on of the activities referred to in paragraphs (1)(c) to (c.2);

  • (b) imposing terms and conditions in respect of

    • (i) the provision of financial services referred to in paragraph 409(2)(a) that are financial planning services,

    • (ii) the provision of services referred to in paragraph 409(2)(c), and

    • (iii) the carrying on of the activities referred to in any of paragraphs (1)(c) to (c.2); and

  • (c) respecting the circumstances in which banks may be exempted from the requirement to obtain the approval of the Minister before carrying on a particular activity referred to in paragraph (1)(c) or (c.1).

Marginal note:Networking

• 411 (1) Subject to section 416, a bank may

  • (a) act as agent for any person in respect of the provision of any service that is provided by a financial institution, a permitted entity as defined in subsection 464(1) or a prescribed entity 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 a bank is acting as agent pursuant to subsection (1); and

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

Marginal note:Restriction on fiduciary activities

412 No 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.

Marginal note:Restriction on deposit taking

• 413 (1) A bank shall not accept deposits in Canada unless

  • (a) it is a member institution, as defined in section 2 of the Canada Deposit Insurance Corporation Act;

  • (b) it has been authorized under subsection 26.03(1) of that Act to accept deposits without being a member institution, as defined in section 2 of that Act; or

  • (c) the order approving the commencement and carrying on of business by the bank authorizes it to accept deposits solely in accordance with subsection (3).

• (2) [Repealed, 2001, c. 9, s. 102]

• Marginal note:Deposits that fall below $150,000

  (3) A bank referred to in paragraph (1)(b) or (c) shall ensure that, on each day that is at least 30 days after the bank receives the authorization referred to in that paragraph,

  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 bank at the end of a day in the preceding 30 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 bank at the end of a day in those preceding 30 days and payable in Canada.

• Marginal note:Exchange rate

  (4) For the purpose of subsection (3), 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 rules prescribed under subsection 26.03(2) of the Canada Deposit Insurance Corporation Act.

• Definition of deposit

  (5) For the purpose of subsection (3), 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:Regulations

  (6) The Governor in Council may make regulations

  • (a) prescribing the deposits referred to in subsection (5); and

  • (b) prescribing terms and conditions with respect to the acceptance of those deposits.

413.1 [Repealed, 2018, c. 27, s. 319]

Marginal note:Deposits less than $150,000

• 413.2 (1) Subject to the regulations, a bank referred to in paragraph 413(1)(b) or (c) 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 413(5).

• Marginal note:Regulations

  (3) The Governor in Council may make regulations respecting the circumstances in which, and the conditions under which, a 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.

Marginal note:Shared premises

• 413.3 (1) Subject to the regulations, no bank referred to in paragraph 413(1)(b) or (c) 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 bank.

• Marginal note:Limitation

  (2) Subsection (1) only applies in respect of premises or any portion of premises on which both the 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 bank referred to in paragraph 413(1)(b) or (c) 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 bank, unless the 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, a bank referred to in paragraph 413(1)(b) or (c) 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, a bank referred to in paragraph 413(1)(b) or (c) 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).

Marginal note:Restriction on guarantees

• 414 (1) A bank shall not guarantee on behalf of any person the payment or repayment of any sum of money unless

  • (a) the sum of money is a fixed sum of money with or without interest thereon; and

  • (b) the person on whose behalf the bank has undertaken to guarantee the payment or repayment has an unqualified obligation to reimburse the bank for the full amount of the payment or repayment to be guaranteed.

• Marginal note:Exception

  (2) Paragraph (1)(a) does not apply where the person on whose behalf the bank has undertaken to guarantee the payment or repayment is a subsidiary of the bank.

• Marginal note:Regulations

  (3) The Governor in Council may make regulations imposing terms and conditions in respect of guarantees permitted by this section.

Marginal note:Restriction on securities activities

415 A bank shall not deal in Canada in securities to the extent prohibited or restricted by such regulations as the Governor in Council may make for the purposes of this section.

Marginal note:Prohibition

• 415.1 (1) It is prohibited for a bank to issue a debt obligation in relation to which the amounts of principal and interest owing are guaranteed to be paid from loans or other assets held by an entity that is created and organized for the principal purpose of holding those loans or other assets and with the intention of legally isolating those loans or other assets from the bank, unless

  • (a) the debt obligation is a covered bond as defined in section 21.5 of the National Housing Act;

  • (b) the bank is a registered issuer as defined in section 21.5 of that Act other than one whose right to issue covered bonds has been suspended; and

  • (c) the debt obligation is issued under a registered program as defined in section 21.5 of that Act.

• Marginal note:Exception

  (2) The Governor in Council may make regulations exempting any type of debt obligation from the application of subsection (1).

Marginal note:Derivatives and eligible financial contracts — regulations

• 415.2 (1) The Governor in Council may make regulations respecting a bank’s activities in relation to derivatives and eligible financial contracts.

• Definition of derivative

  (2) In this section, derivative means an option, swap, futures contract, forward contract or other financial or commodity contract or instrument whose market price, value, delivery obligations, payment obligations or settlement obligations are derived from, referenced to or based on an underlying interest, including a price, rate, index, value, variable, event, probability or thing.

• Definition of eligible financial contract

  (3) In this section, eligible financial contract has the same meaning as in subsection 39.15(9) of the Canada Deposit Insurance Corporation Act.