Canada AI Governance & Post-AIDA Compliance Guide

Canada's AI governance landscape is in a period of transition. The Artificial Intelligence and Data Act (AIDA), which would have been Canada's first comprehensive AI law as Part 3 of Bill C-27, died in Parliament in January 2025 when the legislative session ended. The government has confirmed that AIDA will not return in its original form, though a new AI framework is expected to be tabled in a future parliamentary session.

In the interim, Canadian organizations deploying AI must navigate a patchwork of existing laws and guidelines:

• PIPEDA (Personal Information Protection and Electronic Documents Act) remains the primary federal privacy law and applies to AI systems processing personal information in the course of commercial activities
• Quebec Law 25 (An Act to Modernize Legislative Provisions as Regards the Protection of Personal Information) introduced automated decision-making obligations effective September 2023
• Provincial privacy laws in Alberta and British Columbia provide additional requirements
• Canadian Human Rights Act and provincial human rights codes apply to AI-driven discrimination
• Treasury Board Directive on Automated Decision-Making governs federal government AI use

Areebi helps Canadian organizations manage AI governance through unified policy enforcement, privacy protection, and compliance monitoring that can be configured for federal and provincial requirements.

PIPEDA applies to organizations that collect, use, or disclose personal information in the course of commercial activities. For AI systems, PIPEDA's ten fair information principles impose specific requirements:

• Accountability (Principle 1): Organizations are responsible for personal information under their control, including data processed by AI systems and third-party AI providers
• Identifying Purposes (Principle 2): The purposes for collecting personal information for AI processing must be identified at or before the time of collection
• Consent (Principle 3): Meaningful consent is required for collecting, using, or disclosing personal information in AI contexts. The OPC has emphasized that consent for AI must be specific and informed
• Limiting Collection (Principle 4): AI systems should only collect personal information necessary for identified purposes - broad data harvesting for model training is problematic
• Accuracy (Principle 10): Personal information used by AI systems for decision-making must be accurate, complete, and up-to-date

The Office of the Privacy Commissioner (OPC) has issued guidance on AI and privacy, including investigations into AI systems that process personal information without adequate consent or transparency. The OPC's findings in several high-profile investigations (including Clearview AI) have established precedents for AI governance under PIPEDA.

Areebi's DLP controls help organizations satisfy PIPEDA's data minimization and accuracy requirements by preventing unauthorized personal information from being shared with AI systems. Audit trails provide the accountability documentation PIPEDA requires.

Quebec Law 25 (An Act to Modernize Legislative Provisions as Regards the Protection of Personal Information) introduced Canada's most specific automated decision-making obligations, phased in from September 2023 to September 2024:

• Notification: Organizations must inform individuals when a decision based exclusively on automated processing is made about them
• Explanation: On request, organizations must explain the personal information used, the reasons and principal factors leading to the decision, and the individual's right to have the information corrected
• Human review: Individuals have the right to submit observations and request that the decision be reviewed by a person with authority to change it
• Privacy Impact Assessments (PIAs): Mandatory PIAs for any project involving the collection, use, or disclosure of personal information, including AI systems
• Enhanced consent: Strengthened consent requirements, including the right to withdraw consent and have personal information de-indexed

Quebec Law 25 serves as an important precedent for federal AI legislation. Organizations operating in Quebec must already comply with these requirements, and those operating nationally should consider adopting Quebec's standards as a baseline for future federal requirements.

Areebi supports Quebec Law 25 compliance through policy enforcement that governs automated decision-making, DLP controls that protect personal information, and monitoring dashboards that track compliance across provincial boundaries.

The Treasury Board Directive on Automated Decision-Making (effective April 2019) is the most developed AI governance framework in Canada, though it applies only to federal government institutions. Key requirements include:

• Algorithmic Impact Assessment (AIA): A mandatory tool that evaluates the impact of automated decision systems based on system design, algorithm, decision type, and impact. Systems are scored at four impact levels (I-IV)
• Transparency: Requirements to provide notice, explain decisions, and publish the AIA results for high-impact systems
• Quality assurance: Testing and monitoring requirements scaled to impact level
• Human oversight: Requirements for human involvement in decisions scaled to impact level, from no requirement at Level I to human-in-the-loop at Level IV
• Reporting: Annual reporting requirements for automated decision systems

While the Directive is not directly applicable to private sector organizations, its Algorithmic Impact Assessment tool is publicly available and provides a useful framework for any organization seeking to evaluate AI risk. The Directive is also expected to influence the design of future federal AI legislation.

Organizations selling AI solutions to the Canadian government must comply with the Directive's requirements. Areebi's governance capabilities align with the Directive's requirements for transparency, quality assurance, and monitoring.

While AIDA died in Parliament, the Canadian government has signaled continued intent to develop federal AI legislation. Based on public statements, consultations, and international trends, a future framework is likely to include:

• Risk-based classification: Building on AIDA's approach of categorizing AI systems by impact level, with scaled obligations for high-impact systems
• Alignment with international standards: Strong alignment with the OECD AI Principles (Canada was a founding signatory) and potentially with ISO 42001
• Consumer protection: Requirements for transparency, explainability, and redress for AI-driven decisions affecting individuals
• Privacy integration: Close alignment with PIPEDA reform (also part of the defunct Bill C-27) and Quebec Law 25 standards
• Enforcement mechanisms: An AI and Data Commissioner or empowered Privacy Commissioner with enforcement authority

Organizations that implement robust AI governance now will be well-positioned regardless of the final legislative form. Building on frameworks like the NIST AI RMF through platforms like Areebi provides the foundation for adaptable compliance.

Request a demo to explore how Areebi prepares Canadian organizations for current and future AI governance requirements. Visit our Trust Center for security and compliance documentation.

Despite the absence of comprehensive federal AI legislation, Canadian organizations should build AI governance programs now. Here is a recommended approach:

1. PIPEDA compliance baseline: Ensure all AI systems processing personal information comply with PIPEDA's ten principles. Implement DLP controls to prevent unauthorized data sharing with AI platforms.
2. Quebec Law 25 alignment: If operating in Quebec, ensure compliance with automated decision-making obligations. Consider adopting Quebec standards nationally as a prudent baseline.
3. Shadow AI discovery: Identify and manage all shadow AI tools in use across the organization. Unmanaged AI tools represent the greatest privacy and governance risk.
4. International framework adoption: Implement the NIST AI RMF or pursue ISO 42001 certification to establish a recognized governance foundation.
5. Technical controls: Deploy Areebi's policy engine, DLP, audit trails, and compliance dashboards for continuous governance.

Explore our pricing plans to find the right governance solution for your organization.