Backgrounder: Revision of OSFI’s approach regarding Administrative Monetary Penalties (AMPs)

Overview

The Office of the Superintendent of Financial Institutions (OSFI) issued a letter to industry on its approach to Administrative Monetary Penalties (AMPs). The letter explains the update on OSFI’s approach to assessing penalty criteria for institutions when determining the amount of a penalty. Section 26 of the Office of the Superintendent of Financial Institutions Act sets out the criteria.

Key changes to OSFI’s approach include:

• incorporating additional indicia for assessing the statutory penalty criteria;
• a lower tolerance for contraventions such that penalties will be issued when we determine lower levels of negligence and harm; and
• a revised scaling factor to determine appropriate AMP amounts for small and mid-sized financial institutions.

This approach supports consistency and proportionality in how OSFI uses the AMP tool. OSFI also expects to promote better compliance by financial institutions with their governing statutes.

Why it’s important

The purpose of the change is to align OSFI’s use of AMPs with OSFI’s risk appetite and to reflect current risks and regulatory compliance expectations. The new approach helps OSFI intervene early to help address risks that could jeopardize the public’s confidence in the soundness of the Canadian financial system. Deterring non-compliance aligns with such early intervention. The benefit of early intervention avoids the potential of future non-compliance issues.

The recipients addressed in this letter are responsible for sharing this notice with the management and board of directors of the institution as appropriate.

Implementation

OSFI’s revised approach regarding the AMP methodology is effective for violations that occur after September 11, 2025.

If a contravention occurred on or before September 11, 2025, and is identified on or before December 31, 2026, OSFI will assess that breach using the older—pre-September 11—AMP approach.

OSFI will publish information and instructions related to the revision of the AMP approach by the end of 2025. This will help institutions understand the assessment process for improved compliance and accountability.