Check against delivery
Moderator:
You’ve said OSFI is looking to reduce regulatory burden where possible. Can you give us some concrete examples of where you see opportunities to do that, while still maintaining resilience?
Superintendent Peter Routledge:
* On August 18, I laid out how we are continuing to make regulatory efficiency a discipline in OSFI.We’re reducing the scope and timing of certain integrity and security data requests, shifting the corporate governance consultation to focus on the most material issues, and eliminating redundant data collections. Those changes free up capacity without compromising resilience.
* On supervision, we’re being more measured in how we apply intensity. Operational risk supervision is tough – and rightly so – but we’re recalibrating how we stage and intervene, so the oversight matches the risk profile, not a one-size-fits-all approach.
* In capital, we’re making targeted adjustments. We paused Basel III implementation of the “output floor” to ensure that competitive balance prevails for Canadian banks that compete in the international banking system and to provide Canadian banks with transparency and predictability in OSFI’s capital expectations.
* At the same time, we’re not loosening everywhere. On anti-money laundering,for instance,the trajectory is still tighter – because the risk environment demands it.
Moderator:
You’ve said AML is a prudential issue. With the federal Strong Borders Act (Bill C-2) on the table and the Financial Action Task Force (FATF) review coming up later this year, how concerned are you about AML right now – and what’s changing in how OSFI will supervise it?
Superintendent Peter Routledge:
* AML is a prudential risk. Weak AML controls can erode integrity and confidence, which in turn threaten safety and soundness. That’s why we treat AML as part of our integrity and security risk lens and a priority in our risk outlook.
* No other regulator has a mandate to ensure federally regulated financial institutions (FRFIs) have policies and procedures in place to protect themselves from threats to their integrity and security and from foreign interference.
* Our Integrity and National Security team engages closely with domestic security and intelligence partners as well as our international counterparts to identify threats to FRFIs. By bringing together classified and unclassified data, our team can look at a holistic picture of the integrity and security risks institutions face. That includes influence from foreign jurisdictions.
* Bill C-2 strengthens coordination. If Parliament passes Bill C-2, FINTRAC will join the Financial Institutions Supervisory Committee (FISC). I would be very pleased to welcome FINTRAC at that table. It will facilitate information exchange and allow us to respond more quickly through supervision.
Moderator:
To what extent are OSFI’s actions driven by what happens south of the border, especially when we see deregulatory trends in the United States?
superintendent Peter Routledge:
* Canada’s financial system is navigating a period of profound uncertainty.From escalating geopolitical instability and cyber threats to climate change and domestic economic shifts, the risks facing financial institutions are complex and consequential. Canada is a North American economy, and our banks and insurers compete in th
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