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On September 11, 2025, the Office of the Superintendent of Financial Institutions ("OSFI") published guidance relating to their updated approach to Administrative Monetary Penalties ("AMPs"), indicating that OSFI will begin to issue AMPs to Federally Regulated Financial Institutions ("FRFIs") at lower levels of contravention.1
In retrospect, there may have been some foreshadowing of the change in approach back in June, when OSFI indicated in its Departmental Plan the need for an increase in resources for 2025-26 to, among other things, reinforce their supervisory capacity.2
The changes are effective for violations occurring after September 11, 2025 (except for contraventions that occurred on or prior to September 11, 2025 which are identified on or before December 31, 2026).
Framework
The AMP framework is designed to enforce compliance with the federal financial regulatory regime. The framework is grounded in the Office of the Superintendent of Financial Institutions Act (the "Act"), which grants the Superintendent authority to issue AMPs where a FRFI has committed a violation of the legislation under OSFI's mandate.3
Penalties are set according to the nature and seriousness of the violation and categorized on a scale from minor to very serious based on the below statutory criteria (which have not changed):
- the degree of intention or negligence on the part of the person who committed the violation;
- the harm done; and
- the history of the person who committed the violation with respect to any prior violation or conviction under a financial institutions act within the five-year period immediately prior to the violation.4
For example, failure to comply with conditions or limitations in an order approving the commencement and carrying on of business of the insuring in Canada of risks is considered very serious, while failure to notify the Superintendent of the place of records is considered minor.
Penalties for violations differ between natural persons and entities. Maximum penalties for entities are set at $25,000 for a minor violation, $100,000 for a serious violation, and $500,000 for a very serious violation.5
Changes to AMP Framework Policy
Although the statutory criteria remain unchanged, OSFI has revised its assessment of the criteria to align with OSFI's early intervention risk-appetite whereby "employees are empowered to be proactive and make risk related decisions based on imperfect information".6
OSFI's revised approach now includes:
- additional assessment indicia for the statutory penalty criteria;
- a lower tolerance for contravention such that penalties will be issued for lower levels of negligence and harm; and
- a revised scaling factor for small and mid-sized FRFIs.
The changes to the AMP framework do not apply to the Administrative Procedures for the Late and Erroneous Filing Penalty (LEFP) framework, meaning that FRFIs do not need to be concerned that a late return will lead to increased AMPs.
Caution for FRFIs
FRFIs should review and update their risk management policies and procedures to ensure that they align with the new level of sensitivity for the issuance of AMPs. It may also be necessary to increase or enhance compliance resources or tools in order to proactively identify and monitor potential issues at a preliminary stage (i.e., sometime before OSFI determines that "early" intervention is warranted) and to consider what funds may be available for the payment of AMPs given the increased regulatory risk.
OSFI plans to release additional guidance later in 2025 containing more information and instructions regarding the AMP assessment process. However, FRFIs should not wait for this additional guidance before taking the actions specified above.
Footnotes
1 OSFI, "Letter to Industry – Revision of OSFI's approach regarding Administrative Monetary Penalties" (2025), online: Government of Canada.
2 OSFI, "Office of the Superintendent of Financial Institutions 2025-26 Departmental Plan" (June 17, 2025), online: Government of Canada at page 3.
3 Administrative Monetary Penalties (OSFI) Regulations, SOR2005-267 at s 3(1).
4 Office of the Superintendent of Financial Institutions Act, R.S.C. 1985, c. 18 at s 26; Administrative Monetary Penalties (OSFI) Regulations, SOR2005-267 at Schedule.
5 Ibid at s 25(2).
6 OSFI, "Refining how we approach risk" (2023), online: Government of Canada.
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2025
