The Uneven Regulatory Playing Field In Canada

One of the unique and unusual features of the Canadian bank regulatory system is that Canada regulates financial entities based on what they are rather than what they do. As a result, you can have two entities carrying on the exact same line of business and one will be highly regulated and the other will have very little regulation. The difference is the nature of the entities.

If the entity carrying on a financial services activity is Canadian, then it will be subject to bank-like regulation which will include capital ratios, concentration ratios, AML/ATF requirements and governance requirements. On the other hand, subject to my comments below regarding foreign banks, an entity that is not a Canadian bank, will not be subject to any regulation at this time.