FINTRAC’s administrative monetary penalty against Hub Capital Inc. for anti-money laundering (AML) compliance failures signals renewed intensity in Canada’s regulatory approach to securities dealers and other reporting entities. Hub Capital, an independent wealth management firm operating out of Woodbridge, Ontario, was found non-compliant following a 2023 examination and was assessed a $99,000 penalty in March 2025. The enforcement comes as FINTRAC sharpens its scrutiny over financial sector participants, aiming to reinforce the country’s defenses against money laundering and terrorist financing.

Hub Capital’s case revolves around a series of foundational lapses—insufficient written policies and procedures, inadequate risk assessment documentation, missing compliance training, and lack of independent review of its AML program. These failings contravene key sections of Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and the associated Regulations, which have set out the country’s main AML framework since their introduction in 2000 and regular updates since.

Compliance Obligations Under the PCMLTFA

The PCMLTFA and its associated Regulations impose wide-ranging obligations on financial institutions, securities dealers, casinos, money services businesses, real estate brokers, and several other sectors exposed to financial crime risks. Every regulated entity must implement and maintain a robust compliance regime that covers:

• Written policies and procedures that reflect current laws and business operations, reviewed and approved by senior management
• Regular and documented risk assessments that consider prescribed factors, including products, services, delivery channels, geographic location, and client base
• Ongoing compliance training for all relevant staff, with programs updated as risks or regulations evolve
• Periodic and independent reviews of the institution’s AML regime, including risk assessment and training effectiveness

Failure to meet these core elements exposes an institution to regulatory action from FINTRAC. The recent penalty on Hub Capital illustrates how lapses in just one or two areas—particularly policy documentation and risk assessment—can trigger enforcement even in relatively smaller firms.

Analysis of Hub Capital’s AML Failures

Hub Capital’s penalty is especially noteworthy given the four distinct compliance failings cited by FINTRAC:

• The firm lacked up-to-date, written policies and procedures tailored to its business, and these were not formally approved by a senior officer.
• There was no evidence of a documented risk assessment that took into account FINTRAC’s prescribed factors, including the nature of products and services, the methods of delivery, and the geographic and client risk profiles.
• The compliance training program was neither formalized in writing nor maintained to ensure that staff remained up-to-date on evolving risks and obligations.
• No formal review or audit had been performed on the firm’s compliance regime, leaving potential weaknesses unidentified and unaddressed.

These deficiencies echo persistent themes in FINTRAC’s public communications and regulatory guidance. Regulators have repeatedly stressed that merely adopting generic policies or sporadic training is insufficient for effective risk mitigation. Firms are expected to demonstrate a culture of compliance, with clear evidence of board-level or senior officer oversight.

Trends in FINTRAC Enforcement and Penalties

The Hub Capital case fits into a broader pattern of escalating regulatory enforcement in Canada’s financial sector. According to FINTRAC’s annual reports and public notices, the agency issued 12 Notices of Violation in the 2023–2024 fiscal year, resulting in combined penalties exceeding $26 million. Since obtaining the authority to levy administrative monetary penalties in 2008, FINTRAC has imposed more than 140 such penalties across a range of sectors.

Most frequently cited violations include failure to report suspicious transactions, lack of timely large cash or virtual currency transaction reporting, inadequate client identification, and weaknesses in compliance regimes. Notably, securities dealers and wealth management firms—such as Hub Capital—are increasingly falling under FINTRAC’s spotlight, reflecting the rising complexity and volume of transactions in the non-bank sector.

Administrative penalties under the PCMLTFA are explicitly non-punitive. The intention is not to punish firms but to drive meaningful change in behavior and ensure sector-wide adherence to AML standards. Nonetheless, reputational consequences can be significant. Public disclosure of penalties, now routine, places additional pressure on firms to strengthen their compliance postures and address deficiencies quickly.

The Role of Risk Assessment in Effective AML Programs

A core tenet of Canada’s AML regime is risk-based compliance. The PCMLTFA and guidance from FINTRAC require firms to identify, assess, and document the money laundering and terrorist financing risks inherent in their operations. Risk factors typically include the types of products and services offered, client base (including politically exposed persons), countries or geographic areas of operation, delivery channels (in-person versus online), and transaction patterns.

Effective risk assessment is not a one-off exercise. Firms are expected to revisit and update their risk profiles regularly, especially as their business models, client mix, or the external threat environment changes. The assessment must be documented and used to shape not only internal policies but also staff training and monitoring activities.

In Hub Capital’s case, the absence of a documented and comprehensive risk assessment was a central factor in the penalty. This highlights a common challenge among smaller or independent financial service providers who may lack in-house compliance expertise or underestimate the complexity of AML risks.

Importance of Policies, Procedures, and Senior Oversight

The foundation of an effective AML regime lies in detailed, up-to-date written policies and procedures. These must go beyond generic templates and instead reflect the unique risks, business model, and operational realities of the firm. FINTRAC guidance explicitly requires that these documents are approved by a senior officer or the board, signaling institutional buy-in and accountability at the highest level.

Periodic reviews of policies and procedures, as well as independent testing or audits, are equally important. Regulatory expectations have grown more stringent as financial crime typologies evolve, and static or outdated policies are a red flag for regulators. Firms need to demonstrate that they are proactive, not reactive, in their approach to compliance.

Training and Review: The Human Factor in AML Compliance

Ongoing training ensures that employees across all levels understand their responsibilities and can recognize potential red flags. An effective training program is not simply a box-ticking exercise. Instead, it should be informed by the firm’s own risk assessment and tailored to specific roles—frontline staff, compliance officers, and senior management each require different knowledge and skillsets.

Similarly, FINTRAC expects firms to undertake regular reviews of their entire compliance framework. This includes testing the adequacy of policies, the quality of training, the accuracy of client identification processes, and the effectiveness of transaction monitoring systems. Reviews should be documented and ideally conducted by independent parties or at least by individuals not directly responsible for the AML program’s implementation.

Broader Sectoral Implications and Best Practices

The penalty against Hub Capital serves as a reminder that regulatory expectations in Canada are rising. FINTRAC’s enforcement actions now routinely target not only large financial institutions but also smaller players who may have previously considered themselves at lower risk of regulatory scrutiny.

Best practices for all reporting entities include:

• Maintaining a living set of policies and procedures that reflect current laws, business practices, and risk profiles
• Conducting and documenting regular, detailed risk assessments aligned with FINTRAC guidance
• Delivering role-specific, ongoing AML training, with evidence of attendance and content updates
• Performing independent reviews or audits to test the effectiveness of all elements of the compliance regime
• Ensuring clear lines of accountability to senior management and, where applicable, the board of directors

Firms that adopt these best practices are better positioned to withstand regulatory scrutiny and, more importantly, to play an active role in safeguarding Canada’s financial system from abuse.

Conclusion: Regulatory Lessons from the Hub Capital Case

FINTRAC’s penalty against Hub Capital underlines the reality that no financial sector participant is immune from regulatory oversight, regardless of size or business model. The case underscores the necessity of robust, tailored policies, comprehensive risk assessment, meaningful training, and proactive senior management involvement.

As money laundering threats continue to evolve and as the financial sector grows more complex, Canada’s regulators are signaling a clear intent to enforce the letter and spirit of the law. Firms must treat AML compliance as a continuous, dynamic process—one that requires regular investment, top-down engagement, and an unwavering commitment to ethical business practices.

With administrative monetary penalties on the rise and public disclosures now routine, the costs of non-compliance are not limited to financial sanctions but extend to reputational damage and lost trust among clients and partners. For Hub Capital and others, the lesson is clear: effective AML compliance is not just a regulatory obligation but a cornerstone of responsible business.

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Related Links

• Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA)
• FINTRAC Guidance for Securities Dealers
• FINTRAC’s Compliance Framework
• FINTRAC Annual Report
• OSFI – Canadian Regulatory Guidance

Other FinCrime Central Articles About FINTRAC’s Action

• FINTRAC Cracks Down on AML Failures at Cambrian Credit Union
• Canadian Crystal Currency Exchange Hit With FINTRAC Penalty
• Exchange Bank of Canada Fined $2.46M by FINTRAC

Source: FINTRAC

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