CDIC Record-Keeping and Data Location Change

Summary#

This is the final text of SOR/2020-271 — By-law Amending the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law. It changes record-keeping rules for institutions that are members of the Canada Deposit Insurance Corporation (CDIC). In short: some records must be kept in Canada for six years, but a specific class of foreign-owned subsidiaries may keep them outside Canada under certain conditions.

What it does#

• Moves the rule about keeping the backup material for the Reporting Form from the Canada Deposit Insurance Corporation Differential Premiums By-law into the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law.
• Requires each CDIC member to create and keep records that fully describe its:
  • assets (on- and off-balance-sheet);
  • deposit liabilities (insured and uninsured);
  • other actual or contingent liabilities;
  • revenue and expenses;
  • shareholders’ equity (or equivalent for cooperatives);
  • and the information supporting what is reported in the Reporting Form.
• Requires the records about deposit liabilities and the Reporting Form supporting information to be kept in Canada for six years, and not removed from Canada during that time without CDIC’s written consent.
• If a member institution merges with or acquires another member, the surviving institution must keep those same records from each predecessor for six years and not remove them from Canada without CDIC’s written consent.
• Creates an exception allowing a member that is a subsidiary of a foreign bank (as defined in the Bank Act) or of a regulated foreign entity, and that is incorporated in a country or territory where a trade agreement listed in Schedule IV to the Bank Act applies, to retain those particular records outside Canada — subject to the conditions set out in section 18(3.1) of the Canada Deposit Insurance Corporation Act.

Who's affected#

• Primary: CDIC member institutions (banks and other deposit-taking institutions that are members of the Canada Deposit Insurance Corporation).
• Specifically called out: subsidiaries of foreign banks or regulated foreign entities that meet the Bank Act/Schedule IV criteria.
• Also relevant to: deposit insurance administrators and regulators because the change deals with where records must be stored and how they can be accessed.
• If it is unclear who qualifies for the exception, the definitions in the Bank Act and the Canada Deposit Insurance Corporation Act determine that.

Why it matters#

• It clarifies where important financial records must be stored and for how long: six years is the retention period for key deposit and Reporting Form records.
• It implements Canada’s international commitments on data localization tied to the Canada–United States–Mexico Agreement (CUSMA) by allowing certain foreign-owned bank subsidiaries to store those records outside Canada under specific conditions.
• For affected institutions this can change operational practices about data storage location and handling. For regulators and depositors it affects how and where records will be accessed during supervision, exams, or resolution planning.