132, No. 5 — March 4, 1998

Registration
SOR/98-129 23 February, 1998

FINANCIAL ADMINISTRATION ACT

Electronic Payments Regulations

T.B. 825983-3 19 February, 1998

The Treasury Board, pursuant to paragraph 10(f) of the Financial Administration Act, hereby makes the annexed Electronic Payments Regulations.

ELECTRONIC PAYMENTS REGULATIONS

INTERPRETATION

1. The definitions in this section apply in these Regulations.

"Act" means the Financial Administration Act. (Loi)

"chargeback" means to adjust the amount payable to or claimed by a financial institution as a result of the refusal by the Receiver General to redeem an electronic instruction for payment. (débit compensatoire)

"digital signature" means the result of the transformation of a message by means of a cryptosystem using keys such that a person who has the initial message can determine

"electronic instruction for payment" means an instruction for payment referred to in subsection 35(2) of the Act, issued electronically on media or by on-line transfer, to a financial institution to credit the account of a particular payee with a specific payment. (ordre de paiement électronique)

"financial institution" means an institution, corporation or other entity, incorporated, continued or formed by or under an Act of Parliament or the legislature of a province or under the laws of a foreign state or a political subdivision of a foreign state, that holds deposits and honours cheques and other payment instructions on behalf of its clients and includes a bank, a trust company and a cooperative credit society. (institution financière)

"media" means magnetic tapes, disks, diskettes or any other electronic physical storage device. (support)

"payee" means a person to whom a payment is to be made by means of an electronic instruction for payment. (bénéficiaire)

"payment date" means the date on which payment is to be made to the payee. (date de paiement)

"revoke" means to issue an instruction to a financial institution countermanding a particular electronic instruction for payment. (annuler)

APPLICATION

2. These Regulations apply to every payment made out of the Consolidated Revenue Fund by means of an electronic instruction for payment.

ISSUING ELECTRONIC INSTRUCTIONS FOR PAYMENT

3. Every electronic instruction for payment must

(a) be issued by or under the direction and control of the Receiver General;

(b) include

(c) when issued by on-line transfer, be authorized by a digital signature.

4. The Receiver General shall take all necessary measures to ensure

(a) the security of the system used for the transmission of electronic instructions for payment to financial institutions;

(b) the confidentiality, authenticity and integrity of the data while it is under the control of the Receiver General or being transmitted to a financial institution; and

(c) the security, integrity and safekeeping of the media used to issue an electronic instruction for payment while the media are under the control of the Receiver General or in transit to a financial institution for processing.

AUTHENTICATION

5. (1) All media used to issue an electronic instruction for payment must

(a) contain internal labels that identify the media by setting out

(b) when delivered to a financial institution for processing, be accompanied by a transmittal document, signed by the Deputy Receiver General or by a person authorized by the Deputy Receiver General in writing, that contains the information described in subparagraphs (a)(i) to (v).

(2) The Deputy Receiver General shall provide to a financial institution the names and specimen signatures of all persons authorized to sign a transmittal document addressed to that financial institution.

(3) Every electronic instruction for payment issued by on-line transfer shall be acknowledged by the financial institution that receives it and every electronic authorization shall be verified by the financial institution to ensure the integrity of the instruction.

ACCEPTANCE

6. A financial institution that accepts an electronic instruction for payment shall make the funds available for withdrawal or other use by the payee

(a) not later than the opening of business on the payment date, if the electronic instruction for payment is received by the financial institution before the payment date; or

(b) on receipt of the electronic instruction for payment, if it is received on or after the payment date.

REPLACEMENT PAYMENTS

7. Where it has been confirmed with the applicable financial institution that a payment to be made by means of an electronic instruction for payment has not been credited by the payment date to the account designated by the payee, in accordance with the procedures set out in the agreement with the financial institution for such designation, a replacement payment may be issued to the payee in the same amount as the original payment if

(a) the electronic instruction for payment is revoked; and

(b) the amount already paid to the financial institution, if any, is recovered through chargeback or by other means.

REPEAL

8. The Direct Deposit Regulations (see footnote 1) are repealed.

COMING INTO FORCE

9. These Regulations come into force on February 23, 1998.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

During the past few years, several important changes have been made to the way in which the federal government conducts its activities. The use of computers is increasingly widespread and an increasing number of payments are made through electronic means like direct data transmission.

The new Electronic Payments Regulations will replace the Direct Deposit Regulations and will include the provisions needed to properly monitor direct deposit and electronic payment orders. Moreover, the provisions relating to replacement payments have been simplified and are now similar to those of the Cheque Issue Regulations.

Alternatives

The solution of maintaining the status quo was considered. However, because the use of electronic payment methods is increasingly widespread, new Regulations were necessary to ensure efficiency and appropriate monitoring.

Consultation

In addition to the Department of Justice and the Receiver General, thirteen departments were consulted. The Canadian Payments Association was also consulted.

Compliance and Enforcement

No particular compliance mechanism is needed, since the Regulations provide for a monitoring framework within which the Receiver General of Canada must intervene to issue the government of Canada's direct deposit and electronic payment Orders.

Contact

Gilles Vézina
Project Manager
Financial Management Policy Division
Deputy Comptroller General Branch
Treasury Board Secretariat
L'Esplanade Laurier, 8th Floor
West Tower
Ottawa, Ontario
K1A 1E4
Telephone: (613) 957-9660
FAX: (613) 952-9613

Footnote 1

SOR/84-974

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