The Bank of Canada has warned fintechs against bragging about getting registered under its new oversight regime for payments companies.
Shot across the bow: The central bank released the warning in a newsletter Tuesday, saying the only way fintechs are allowed to tell the public about their status is by directing them to a registry on its website. Registration just means a company meets the institution’s criteria to be listed, the newsletter said: “Any statement—written, verbal or otherwise—suggesting that the Bank endorses, approves of or certifies your business is strictly prohibited.”
All non-bank businesses that make money from payment services are required to register with the institution and follow rules designed to safeguard users against company failures, hacks and other risks. Asked to clarify when firms will have to demonstrate compliance, Bank of Canada spokesperson Akim Thibouthot said in an email that the institution doesn’t comment on supervisory activities for individual companies. All companies processing payments in Canada or handling payments on behalf of Canadian consumers had to submit registration applications with the central bank in Nov. 2024, which assumed oversight in September. Today, more than 900 companies are registered, with almost as many applicants waiting for a decision and 32 that the Bank of Canada has refused or revoked.
Missing tips missive? The central bank is issuing the warning amid an ongoing scandal over the Everyday Payments tip-pooling platform that has largely affected the restaurant industry, which saw millions go missing from user accounts last month. In February, Everyday Payments announced it was working on getting registered with the Bank of Canada, before walking that back two days later and saying it wasn’t required to because its parent company handles payments. Thibouthot did not directly respond when asked if the warning was prompted by the missing tips scandal.
Marketing opportunity: The Bank of Canada started releasing the names of payments companies registered under the new regime in October, and many—including some prominent Canadian fintechs—trumpeted the news. Daniel Eberhard, CEO of Toronto neobank Koho, said in a November release that registration “is the strongest possible testament to the robust tools we’ve built to protect our users and strengthen trust in Canada’s financial system.” Payments fintech Brim Financial says on its website that registration “reflects that Brim adheres to high standards.” Other companies that have put out releases announcing their registration include Interpolitan Money Canada, which said registration confirms the company is built on “strong governance, robust controls and a clear focus on safeguarding end-user funds.” U.K.-based LemFi, meanwhile, said registration “demonstrated our ability” to meet strict risk management standards.
In an email, Eberhard called the directive “good policy” and said he respects and supports it. Abraham Tachjian, head of regulatory affairs at Brim, declined to comment. Sonya Cléroux, Interpolitan’s head of Canada, said the company is reviewing the Bank of Canada’s directive and that it was referring to its “internal operational standards” in the release. LemFi did not respond to a request for comment. Thibouthot did not directly respond when asked if announcements like these violate the Bank of Canada’s directive.
Crypto context: Regulators issued a similar warning to crypto companies during a 2021 crackdown that required them to register as securities dealers or leave the country. In September of that year, they published marketing guidelines for crypto firms, which included an admonishment against suggesting a regulator approves of or endorses their products. The Financial Transactions and Reports Analysis Centre of Canada, a federal anti-money laundering watchdog, also warns money-services businesses that registration with the regulator does not constitute an endorsement.