National Security Review Process under the Retail Payment Activities Act

Overview

This document explains how applications to become registered retail payment service providers, or PSPs, will be reviewed for national security purposes under the Retail Payment Activities Act and the associated regulations. It provides information on legal authorities, stages of review, and timelines.

The Act provides the Minister of Finance with the authority to address risks related to national security that could be posed by PSPs. This authority includes the ability to review applications, refuse applications, revoke registrations, order undertakings or conditions, as well as issue national security orders for a PSP to take or refrain from taking any action.

The Minister's exercise of the national security authorities is supported by the Royal Canadian Mounted Police, Canadian Security Intelligence Service, Communications Security Establishment Canada, and Public Safety Canada in accordance with their respective mandates. 

1) PSP Applicants

Screening and Review 

Individuals and entities that are subject to the Act are required to submit a registration application to the Bank of Canada. Registration applications deemed complete by the Bank of Canada will be submitted to the Minister for national security review purposes.

Upon receipt, the Minister may, within 60 days, determine whether to conduct a national security review. The 60-day timeframe may be extended should additional time be needed. In these instances, the Bank of Canada will be notified of each extension who will then notify the applicant accordingly.

If the Minister decides to review an application for reasons related to national security, the Minister must notify the Bank of Canada of the decision, and the Bank of Canada must then notify the applicant. The Minister must conduct the national security review within 180 days. The 180-day timeframe may be extended should additional time be needed. In these instances, the Bank of Canada will be notified of each extension and will then notify the applicant accordingly. 

Applicants will be contacted directly should additional information be needed to support the screening and review process. At the end of the process, the Minister can decide to raise no concerns about the application, require undertakings or impose conditions, or direct the Bank of Canada to refuse the application.

Conditions and Undertakings

The Minister may, by order, require undertakings or conditions if the Minister is of the opinion that it is necessary to do so for reasons related to national security. A copy of each order made by the Minister will be provided to the Bank of Canada who will then provide a copy to the applicant. The applicant will be contacted directly should additional engagement be needed during this process.

Directive to Refuse Registration

The Minister has the authority to issue a directive to the Bank of Canada to refuse registration for any of the following reasons:

• there are reasons related to national security;
• the applicant has failed to provide additional information requested by the Minister to support the national security review;
• the applicant has not complied with the undertakings or conditions of registration ordered by the Minister; and,
• the applicant has provided false or misleading information.

The Bank of Canada will notify the applicant, in writing, of the Minister's decision to refuse registration. The Bank of Canada must notify the applicant of a refusal decision as soon as feasible. An individual or entity will not be permitted to operate in Canada if the Minister has issued a directive to the Bank of Canada to refuse its registration.

Review of Directive

Upon being notified that registration has been refused, the applicant will have 30 days to make a request to the Minister for a review of the refusal. The Bank of Canada will communicate instructions on how to submit the request for review to the Minister.

Following the completion of the review, and after giving the applicant an opportunity to make representations, the Minister must confirm or revoke the directive to refuse registration. The Bank of Canada will be notified of the Minister's decision and the Bank of Canada will then, as soon as feasible, notify the applicant.

Publication of Registration

The Bank of Canada publishes a registry of registration decisions on its website, including lists of:

• registered PSPs; and,
• individuals or entities that had their registration refused, or PSPs that had their registration revoked and the reasons why, including if a PSP has ceased operations.

2) Registered PSPs

For registered PSPs, the Minister can revoke registrations should there be reasons related to national security. The Minister may also require conditions or undertakings (see the description above).

Revocation of Registration

The Minister may issue to the Bank of Canada a notice of intent to issue a directive to the Bank of Canada to revoke a PSP's registration for any of the following reasons:

• there are reasons related to national security;
• the PSP has failed to provide additional information requested by the Minister;
• the PSP has not complied with undertakings or conditions ordered by the Minister;
• the PSP has provided false or misleading information; and
• the PSP has not complied with a national security order.

The Bank of Canada will, as soon as feasible, notify the PSP, in writing, of the issuance of the Minister's notice of intent. The PSP will have 30 days to make a request to the Minister for a review of the notice of intent. The Bank of Canada will communicate instructions on how to submit the request for review to the Minister.

Following the completion of the review, and after giving the applicant an opportunity to make representations, the Minister must either withdraw the notice of intent or issue a directive to the Bank of Canada to revoke the registration. If a PSP does not request a review, the Minister may issue a directive to the Bank of Canada to revoke the PSP's registration.

3) National Security Orders

The Minister has the authority, at any time, to issue a national security order to direct any PSP (who is within the scope of the Act) to take or to refrain from taking any measures related to the performance of retail payment activities if it is necessary to do so for reasons related to national security.

If, in the Minister's opinion, the length of time required for representations to be made might be prejudicial to the public interest, the Minister may make a temporary order to have effect for a maximum of 30 days. The temporary order continues to have effect if no representations are made or, if representations are made, the Minister notifies the PSP that there are not sufficient grounds for revoking the order.

The Bank of Canada will be provided with a copy of each national security order or temporary order, and the Bank of Canada will then provide a copy to the PSP.

Related Links

• Retail Payment Activities Act
• Retail Payment Activities Regulations
• Bank of Canada – Information on Retail Payments Supervision

Enquiries

Email: rpaa-lapd@fin.gc.ca