Canadian Lawyer InHouse

October/November 2021

Legal news and trends for Canadian in-house counsel and c-suite executives

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16 FEATURE CANADIAN FINANCIAL INSTITUTIONS are preparing for significant changes to the payments system. The "Lynx" high-value payments system integration should launch this fall, and "Real Time Rail" in 2022. RTR will allow Canadians to make and receive irrevocable payments within seconds, day or night, 365 days a year. The new systems are a part of Canada's payments modernization process, allowing Canada to be competitive in the global digital payments ecosystem. In addition to processing large-value payments with real-time settlement finality, Lynx will support several outcomes that will benefit Canadian financial institutions and their clients. It will also support flexibility for future technologies, including interfaces and applica- tion program interfaces, and enhanced cyber security and resilience capabilities, according to Financial institutions welcome evolving payments ecosystem Anne Butler, chief external relations and legal officer at Payments Canada. The first of a two-part release of Lynx will consist of a new real-time gross settlement system. Payments Canada has met several critical project milestones in collaboration with technology partners IBM and SIA, as well as 16 financial institutions which will be participating in Lynx. This process includes the completion of extensive industry testing. "In preparation for Lynx and Real Time Rail, legal departments at financial institutions should understand the new rules, the impact of enhanced data moving with payments — both risks and benefits — and collaborate with product teams to help them take full advantage of the new features and function- ality to support enhanced customer experi- ence," says Butler. Lynx high-value payments and Real Time Rail will allow Canada to stay at the forefront of payments innovation As one of the financial institutions partici- pating in Lynx, CIBC's legal department played a crucial role in working with industry representa- tives to address targeted issues that arose throughout the planning process. These issues related to applying rules across jurisdictions, including anti-money laundering requirements and participants' privacy and contractual obliga- tions. The legal team at CIBC was also a key contributor in mapping out the impacts of Real Time Rail. The team assessed liability, gover- nance and oversight opportunities and the impact of evolving laws such as the proposed Retail Payments Activities Act, or proposed amendments to the Personal Information Protection and Electronic Documents Act. "The ability to transmit increasing amounts of data securely with a payment will help business clients build efficient processes to manage their business more easily," says Kikelomo Lawal, executive vice-president and chief legal officer at CIBC. "We also continue to look to expand on the additional opportuni- ties that immediate funds and payment data provide for consumer clients." CIBC is exploring additional services that can come from including data with payments and consulting clients to help the bank better understand how they will use the data and what services will provide the most value to them. Canada is recognized as a leader in digital "The ability to transmit increasing amounts of data securely with a payment will help business clients build efficient processes to manage their business more easily." Kikelomo Lawal, CIBC

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