Canada proposes to expand application of Investment Canada Act to foreign banks and move forward with expanding fintech investment powers

On April 29, the Government of Canada introduced Bill C-30, An Act to implement certain provisions of the spring economic update tabled in Parliament on April 28, 2026, which includes proposed amendments to the Bank Act (BA) that will expand the scope of Canada’s foreign investment review regime as it applies to foreign banks and their affiliates. The proposed amendments would close a long‑standing exemption that had shielded certain foreign bank investments from review under the Investment Canada Act (ICA), which provides for both the net benefit review and national security review of certain investments by non‑Canadians. The Spring Economic Update 2026¹, released prior to the tabling of Bill C-30, noted that these amendments will support long-awaited regulations that would allow federally regulated financial institutions to make a broader range of investments in financial technology (fintech)-related entities.

What you need to know

• Part XII.01 of the BA currently permits foreign banks and entities associated with foreign banks (EAFBs) with a financial establishment in Canada to make certain non‑financial sector investments in Canadian businesses without triggering review under the ICA.
• Bill C-30 proposes amendments to the BA that would narrow this carve‑out by making certain investments in Canada by foreign banks and EAFBs with a financial establishment in Canada subject to the ICA where those investments do not otherwise require regulatory approval under the BA, the Trust and Loan Companies Act, or the Insurance Companies Act.
• We are hopeful that, with these proposed amendments, the path will now be cleared for the long-awaited 2018 fintech amendments to the BA, the Trust and Loan Companies Act, or the Insurance Companies Act to come into force, as alluded to in the Spring Economic Update 2026.

Background: the existing “carve‑out” for foreign banks

Prior to 1980, foreign banks were effectively not permitted to carry on business in Canada. In the Banks and Banking Law Revisions Act, 1980 (1980 Bank Act), which replaced the pre-existing Canadian banking law and was the predecessor to the current BA, an amendment was made to permit foreign banks to establish banking subsidiaries and certain other entities in Canada. Because most of the entities that a foreign bank could acquire in Canada required approval from the federal Minister of Finance, the 1980 Bank Act exempted such transactions from the predecessor to the ICA. Similarly, in the 1992 overhaul of the BA, the Explanatory Notes released when the Bill was tabled in Parliament indicated that the provision of the 1980 Bank Act which required “consent for acquisitions in Canada of shares or assets, on the establishment of a new business by a foreign bank and the paramountcy of the Bank Act over the Investment Canada Act in this regard” would be retained². Subsequent amendments were made to the BA (notably in 1999 and 2001) that streamlined regulatory requirements for foreign banks operating in Canada to enable more competition: a number of the approval requirements were eliminated, but the exemption from the ICA was maintained.

The proposed amendments to the BA are intended to address that oversight and are important, particularly given increasing scrutiny of the integrity and national security imperatives of such transactions.

The proposed amendments

Under the current framework, Part XII.01 of the BA permits foreign banks and entities associated with foreign banks (EAFBs) with a financial establishment in Canada to make certain non‑financial sector investments in Canadian businesses without triggering review under the ICA.

The proposed amendments would narrow this carve‑out by making certain investments in Canada by foreign banks and EAFBs with a financial establishment in Canada subject to the ICA where those investments do not otherwise require regulatory approval under the BA. In other words, under the revised framework, investments by foreign banks and EAFBs with a financial establishment in Canada would fall within one of the following regulatory pathways:

• review under the ICA, including its national security provisions; or
• approval by the Minister of Finance or the Superintendent of Financial Institutions under the BA, the Trust and Loan Companies Act, or the Insurance Companies Act, as applicable.

While the primary policy objective of the proposed amendments is to ensure that foreign bank investments are no longer insulated from national security review, their legal effect is broader. By restoring the application of the ICA, the amendments would also re‑engage the ICA’s net benefit review regime where applicable thresholds are met.

Application of the proposed amendment

The proposed amendments would take effect 120 days after Bill C-30 receives Royal Assent. Foreign banks that are planning transactions that could close after the amendments take effect should therefore anticipate that the ICA will apply. They should use the 120-day transition period to assess the application of the ICA to their proposed transaction and take steps to ensure compliance. That could include filing a voluntary notification prior to the new law taking effect, in order to ensure there are no subsequent compliance uncertainties.

Nothing in the legislation suggests that it will have retroactive effect on transactions completed prior to the coming-into-force date.

Why this change is significant

The expansion of ICA applicability is meaningful because the ICA’s national security regime is both broad and discretionary. In particular:

• there are no monetary thresholds for national security review;
• minority and non‑controlling investments may be captured; and
• transactions can be reviewed after closing, creating potential retroactive exposure.

As a result, foreign banks may now face ICA notification or review obligations for transactions that historically might not have required any regulatory oversight.

Conclusion

The proposed amendments to the BA represent a meaningful shift in Canada’s approach to foreign bank investments. While the policy objective is focused on fixing gaps in the current national security review regime, the amendments remove a long‑standing exclusion from the ICA, re‑exposing certain foreign bank investments to foreign direct investment review on a prospective basis.

If enacted, the proposed amendments will require foreign banks and their affiliates to reassess how Canadian investments are structured and timed. In particular, affected parties should consider (i) whether proposed or ongoing investments may now trigger ICA notification or review requirements; and (ii) how expanded ICA exposure may affect deal certainty and closing timelines.

Foreign banks and investors should carefully consider the implications of this change when planning Canadian investments and engage regulatory counsel early to assess ICA risk under the new framework.