A primer for Canadian Law Enforcement on the upcoming changes to Canada’s Banking System

canada real-time payments rtr canadian financial crime agency adeel khamisa

This image is AI-generated.

An exclusive article by Adeel Khamisa

Canada is about to undergo one of the largest shifts to its financial system in decades. The transition to real-time payments, open banking, a regulated Canadian stablecoin, and the formation of a new Financial Crimes Agency will fundamentally reshape how money moves, how banks operate, and how law enforcement responds to financial crime. Most Canadians will see this as a convenience upgrade: instant transfers, more financial apps, and better integration between services. But underneath that convenience sits a structural challenge. This article will also draw on some examples of countries like the UK, Singapore, and Australia that have already made similar changes.

The speed at which money moves defines the speed at which fraud, money laundering, and organized crime can move. And while Canada is building the technology to move funds instantly, the legal and enforcement frameworks required to police that system remain incomplete.

Structural and Policy Changes Coming in 2026

Real-Time Payments

Today, Canada relies on a patchwork of payment networks: EFT, Interac, AFT, and wire payments. None of these systems settles transactions in true real time. The Real-Time Rail (RTR) will change that. Once active, payments across institutions will settle within seconds, 24 hours a day, 7 days a week. This opens the door to new consumer experiences, new fintech services, and new efficiencies for small and medium enterprises.

But the shift from multi-day settlement to instantaneous settlement comes with a cost.

Settling transactions in seconds instead of days poses a challenge, much of which we’ve already seen in the UK when it adopted its Faster Payments system in 2008. Banks had to implement real-time monitoring and analytics because funds could move through several institutions at a fast pace, leaving investigators with almost no time to intervene. One of the fastest-growing financial crimes in the UK, as a result, was Authorized Push Payment (APP) fraud. In a real-time system, the sender initiates the transaction directly. That means they can be manipulated or coerced into sending money to another party, often through social engineering, romance scams, impersonation fraud, or trusted third parties with access to funds.

The crime itself is not new. What changes is the speed and irrevocability of the transfer. Once the funds move, they are gone.

This type of fraud will rise significantly in Canada and will be magnified by the other features the system affords, including open banking and the introduction of a domestic stablecoin.

Open Banking

If RTR is the backbone of the payments system, open banking is the layer that provides access to consumers, retailers, and fintech developers. With standardized APIs and the ability to settle in real time, third-party institutions will not only have more control over transactions, but they will also be responsible for handling consumer data, transaction initiation, and integration across platforms.

Think of existing entities in this ecosystem: Wealthsimple, budgeting tools, credit score platforms, or mortgage comparison apps. All of these will have the ability to access account data or initiate transactions through a standardized framework instead of through screen-scraping and proprietary integrations.

For consumers, this is an upgrade. For banks, it is necessary to modernize. But for financial regulators and law enforcement, open banking introduces more nodes and more risk surfaces. A compromised third-party app becomes a direct access point into real-time money movement. Fraud patterns that previously took days to execute can now unfold in seconds.

It also elevates the need for a new form of transaction monitoring—one that requires banks, fintechs, and regulators to share information instantly, not through periodic audits or batch reports. This will have implications on the types of freeze and production orders law enforcement agencies will be required to serve based on suspicious activity.

The Canadian Stablecoin

Canada is also moving toward a regulated, fiat-backed stablecoin that will operate on the Real-Time Rail rather than on public blockchains. Unlike USDT or USDC, which can move across multiple blockchains and be laundered through chain-hopping, mixing, and decentralized exchanges, the Canadian stablecoin will exist entirely within a regulated environment. Every user will be identifiable. Every transfer will be logged. And every transaction will be reversible if the regulations permit it.

This makes it fundamentally different from traditional crypto assets, but it also raises regulatory questions. Stablecoins require:

clear freeze and seizure rules
regulated custody
reserve management standards
uniform AML procedures
clarity on transaction reversibility

All of these components exist in concept, but none of them have been legislated yet. The government has outlined the framework, but the enforcement mechanics remain undefined.

What Still Needs to be Defined That will impact Law Enforcement and Banks

This is where Canada faces the largest challenge. Budget 2025 introduced strong commitments to creating a Financial Crimes Agency, strengthening FINTRAC oversight, regulating stablecoins, and increasing fraud-prevention obligations. But the actual legal powers needed to enforce these commitments in a real-time environment have not been written into law. Many of these have to be defined before the system goes into place so that vulnerable gaps can’t be exploited.

The gaps include:

Real-time freezing powers

Canada has not yet defined:

How police can freeze funds that move within seconds
whether “freeze first, authorize later” rules will exist
whether banks can halt suspicious transfers in-flight
time limits on emergency freezes
oversight mechanisms for rapid intervention

Without these, fraud proceeds will disappear before investigators can act.

Real-time warrant procedures

Canada’s current model requires court-approved warrants and production orders that can take hours or days. In a real-time system, that timeline is unworkable.

The law does not yet say:

Whether digital or telewarrants will support instant freezes
Whether automated triggers can hold funds until review
Whether banks must react instantly when receiving an order

Inter-bank signaling

Countries with instant payments require banks to warn each other in real time if a suspicious transfer is in progress. Canada has not defined such obligations.

Financial Crimes Agency powers

The agency exists on paper, but its:

investigative tools
warrant authority
ability to order freezes
cross-border jurisdiction

remain undefined.

Stablecoin seizure rules

Because the Canadian stablecoin is not blockchain-based, regulators must create clear rules for:

freezing balances
reversing transactions
seizing assets
auditing reserves

None of this has been legislated.

These gaps collectively form a structural risk: Canada is building a high-speed financial system with low-speed enforcement tools.

Lessons from Real-Time Jurisdictions

The UK faced this exact problem. Fraud skyrocketed, mule networks expanded, and APP scams became the fastest-growing crime category. In response, the UK implemented real-time freezing laws, including:

instant freeze authority at the bank level
mandatory SAR filings
NCA moratorium periods
account Freezing Orders (AFOs) issued by Magistrates’ Courts

Singapore and Australia adopted similar models, requiring banks to support immediate freezes, real-time fraud detection, and cross-bank coordination.

Canada will need to adopt comparable tools. The technology alone cannot prevent crime. The legal structure must keep pace with the system.

Conclusion: Canada Must Modernize Enforcement Alongside Innovation

The modernization of Canada’s financial system is overdue. Real-Time Rail, open banking, and a regulated stablecoin will bring convenience, competition, and innovation. But these advances also create exposure. Criminals adapt faster than legislation, and a real-time financial ecosystem amplifies that risk.

Canada’s challenge is not the technology; rather, it is the legal framework needed to police it. Without real-time warrants, real-time freezes, and real-time information sharing, the country will face the same surge in fraud that other jurisdictions experienced. The next year of policymaking will determine whether Canada learns from the experiences of others or repeats them.

Key Points

Canada is undergoing a foundational financial system shift, introducing Real-Time Rail (RTR) payments, open banking, and a regulated domestic stablecoin.
The transition to instant settlements enables fraud (like Authorized Push Payment or APP fraud) and money laundering to occur at a speed that current, slower legal and enforcement mechanisms cannot counter.
Major gaps exist in Canada’s legal framework, including the lack of defined real-time freezing powers, instant warrant procedures, and inter-bank signaling obligations.
The UK’s experience with faster payments demonstrates that a high-speed financial system without corresponding high-speed enforcement tools leads to a significant rise in financial crime.
The success of the new system and the new Financial Crimes Agency depends on legislating essential tools like immediate freeze authority and transaction reversibility for the new stablecoin before the system launches.

Some of FinCrime Central’s articles may have been enriched or edited with the help of AI tools. It may contain unintentional errors.

Want to promote your brand, or need some help selecting the right solution or the right advisory firm? Email us at info@fincrimecentral.com; we probably have the right contact for you.

A primer for Canadian Law Enforcement on the upcoming changes to Canada’s Banking System

Table of Contents