As the implementation date for the Retail Payment Activities Act (RPAA) approaches, Payment Service Providers (PSPs) in Canada face new challenges in safeguarding end-user funds. These stringent requirements, designed to protect consumer interests and maintain the integrity of the retail payment ecosystem, are set to take effect on September 8, 2025.
Safeguarding requirements under RPAA Regulations (Bank of Canada)
The PSP updates to safeguarding requirements under the RPAA (Bank of Canada) Regulations will come into effect in September 2025.
These requirements ensure that FIAT funds or other secure and liquid assets held on behalf of an end user are segregated from the PSP’s own funds and placed in trust, insured, and/or guaranteed. As such, insolvency or gross mismanagement by the PSP has no bearing on the ability of the end user to recover their funds.
Previously, the Bank of Canada stipulated that safeguarding measures applied only to end-user funds held with the PSP longer than intraday. The Bank of Canada has relaxed the threshold to the following:
“Where a PSP receives end-user funds with concurrent instructions for the funds to be immediately transferred, those funds are not considered to be at rest, and, as such, are not held.”
How RPAA Safeguarding Requirements Impact Different Business Models
If companies only transmit or remit payment instructions without offering to store FIAT funds or other secure and liquid assets on behalf of end-users (such as an e-wallet), these safeguarding measures may not apply. This is because all transactions on behalf of the end-users always have concurrent instructions for the funds to be immediately transferred. However, these companies must still explain in their RPAA Policy and report why these safeguarding measures do not apply to their operations.
For companies offering e-wallets or other accounts (such as virtual IBANs) where an end-user can hold/store FIAT funds or other secure and liquid assets for future payment instructions, the safeguarding requirements come into effect.
Key Safeguarding Requirements
The RPAA mandates that PSPs holding end-user funds implement robust safeguarding measures:
- Segregation of Funds: PSPs must separate end-user funds from operational funds, either through dedicated trust accounts or insurance/guarantee mechanisms.
- Timely Fund Placement: End-user funds must be placed in a safeguarding account as soon as practical and no later than the end of the next business day after receipt.
- Comprehensive Framework: PSPs need to establish, implement, and maintain a framework outlining their approach to mitigating legal and operational risks.
- Detailed Record-Keeping: Maintaining accurate records of end-user information and a ledger of held funds is crucial.
Challenges and Considerations
Implementing these safeguarding measures presents several challenges:
- The requirements are intricate and resource-intensive, posing difficulties for startups and smaller organisations.
- PSPs may need to overhaul their existing systems and processes to ensure compliance.
- Identifying and mitigating all potential risks to end-user funds requires expertise and continuous vigilance.
- Regular reviews and reporting are necessary to ensure ongoing compliance.
How Advapay Helps MSB Businesses Stay Compliant
Navigating the safeguarding requirements under the Retail Payment Activities Act (RPAA) can be daunting. Advapay simplifies the process, offering expert guidance and tailored solutions to keep your MSB compliant and competitive.
List of services Advapay provides
- RPAA Registration Services
- Compliance Program Review and Development to meet current FINTRAC and upcoming RPAA Regulations
- Account Opening Consultations and Guidance including safeguarding accounts
- Ongoing Compliance Guidance through Compliance as a Service
Why Choose Advapay for Your Compliance Needs?
Regulatory Expertise
We are a team of experienced compliance specialists who consistently stay at the forefront of regulatory updates, ensuring our knowledge aligns with RPAA regulations.
Tailored Compliance Solutions
Every payment service provider (PSP) is different. We offer customised solutions designed specifically for the operational models of MSBs — whether crypto, remittances, currency exchanges, or digital payments.
Spotting Risks Before They Become Problems
Compliance mistakes can cost time and money. Our experts conduct thorough compliance assessments to identify potential gaps before they turn into expensive issues.
Save Time and Money
We help you set up efficient processes that save time and reduce costs, allowing you to focus on growing your business. Our compliance-as-a-service solution lets you fully outsource compliance expertise while we support all your compliance needs.
Don’t Wait, Act Now
The RPAA implementation date is fast approaching. Proactive preparation is key to guaranteeing smooth compliance and avoiding potential penalties. Preparing documents and submitting them to the Bank of Canada can take up to 2 months – don’t wait until the last minute.
Contact Advapay Canada’s team of experienced compliance consultants today. We’ll help you develop a robust safeguarding framework, implement effective controls, and stay ahead of regulatory requirements.
