In a rare move that goes against longstanding precedent, the Canadian government has chosen not to shut down Wealth One Bank of Canada despite its regulatory missteps. Instead, Ottawa approved a $58-million deal by the Globalive consortium to acquire a 65% stake in the bank, giving it a second chance at survival and growth. Traditionally, such compliance issues would have led to the bank’s quiet absorption into a larger institution.
A Modest Bank with Big Scrutiny
Founded in 2016, Wealth One is a Schedule 1 bank operating two branches in Toronto and Vancouver. It primarily collects deposits through high-interest accounts and offers uninsured retail mortgage loans. With about $516 million in assets, the bank has yet to post a profit. Despite its small scale, the Department of Finance raised red flags in late 2022, citing potential risks of money laundering and foreign interference.
Serious Compliance Failures Trigger Action
A major blow came in early 2023 when the Financial Transactions and Reports Analysis Centre (FINTRAC) fined Wealth One $676,500. The penalty stemmed from the bank’s failure to create proper compliance procedures and neglect to report suspicious transactions potentially linked to money laundering. These administrative lapses led to swift action from then-finance minister Chrystia Freeland, who ordered three directors to divest their shares and cut all ties with the bank’s management.
National Security Demands on a Small Operation
Following this, the government imposed extensive conditions on the bank. These included moving the Toronto head office, conducting security sweeps, hiring a third-party monitor, appointing compliance officers with national security clearance, and rolling out advanced training for staff. These are high-level security measures typically not seen in a two-branch bank with a simple lending-deposit business model.
A Shift in Strategy: Promoting Competition
Historically, troubled banks in Canada were merged with larger institutions to reduce systemic risk. A similar case occurred in 1986 when the Mercantile Bank was merged into National Bank of Canada. However, this time, regulators seemed to favor competition over consolidation. Ottawa’s support for Globalive’s takeover suggests a willingness to encourage new players in the traditionally tight banking sector.
Globalive’s Vision: More of the Same—But Better?
Globalive, led by Anthony Lacavera—known for founding Wind Mobile—has promised to continue Wealth One’s existing model, just at scale. The firm positions itself as a backer of “high-trust people solving hard problems in regulated, overlooked spaces.” Yet, simply expanding Wealth One’s margin-based business model may not satisfy federal regulators or the Office of the Superintendent of Financial Institutions (OSFI), especially amid challenges in Canada’s real estate market.
The Road Ahead: Reinvention Required
Wealth One now has a rare second chance. But that reprieve comes with intense scrutiny and expectations. For the new ownership to truly succeed, they must go beyond “more of the same” and prove that the bank can meet Canada’s regulatory standards while offering a safe, credible alternative to the Big Five banks.
