FINTRAC’s $99K Penalty Against Hub Capital Highlights Urgent Need for AML Reform Across Canada’s Financial Sector

Canada’s financial crime regulator, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), has issued a $99,000 administrative monetary penalty against independent wealth management firm Hub Capital Inc., in a move that signals renewed regulatory vigor toward anti-money laundering (AML) enforcement.

The penalty, handed down in March 2025 following a 2023 compliance examination, underscores FINTRAC’s sharpened focus on securities dealers and other reporting entities subject to Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).

Based in Woodbridge, Ontario, Hub Capital was found to have breached several foundational AML compliance obligations. According to FINTRAC, the firm failed to maintain adequate written policies and procedures, neglected to conduct a formal risk assessment, did not provide appropriate staff training, and lacked an independent review of its AML regime.

These failures, which contravene multiple provisions of the PCMLTFA and its associated Regulations, have brought Hub Capital into the spotlight at a time when FINTRAC is emphasizing risk-based, outcome-focused compliance across all levels of the financial services sector. “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,” the regulator stated in its release.

The Regulatory Obligations Under Scrutiny

The PCMLTFA, in force since 2000 and amended regularly, imposes broad obligations on a wide array of businesses vulnerable to financial crime risks—including securities dealers, casinos, real estate brokers, money services businesses, and financial institutions. Each reporting entity must implement and maintain a comprehensive compliance regime consisting of:

• Written policies and procedures tailored to the business’s operations, regularly updated and approved by senior management;

• A documented risk assessment covering FINTRAC-prescribed factors such as products, services, delivery channels, geographic exposure, and client base;

• Ongoing compliance training for staff, adaptable to evolving risks and regulatory updates;

• Periodic, independent reviews of the institution’s entire AML framework, including risk assessments and training effectiveness.

Failure in any of these areas can trigger enforcement. In Hub Capital’s case, the gaps were not just technical oversights but reflected a deeper deficiency in AML governance. The firm’s lack of a documented risk assessment, for instance, suggested a fundamental lapse in understanding and managing its exposure to money laundering threats.

A Closer Look at Hub Capital’s Compliance Lapses

The penalty is particularly noteworthy due to the clarity and breadth of compliance deficiencies FINTRAC identified. The regulator flagged four major areas of concern:

1. Policies and Procedures – Hub Capital had no up-to-date, written policies and procedures tailored to its business. Moreover, these documents had not been formally approved by a senior officer, as required under the Regulations.

2. Risk Assessment – FINTRAC found no evidence of a documented risk assessment considering the mandatory factors such as the nature of Hub Capital’s services, delivery channels, geographic areas of activity, and client risk profiles.

3. Training Deficiencies – The firm failed to implement a formalized training program. Training was neither documented nor maintained to ensure that staff were informed of evolving risks and obligations.

4. Independent Review – Hub Capital had not performed a formal review or independent audit of its compliance program, leaving systemic vulnerabilities unexamined and unaddressed.

These findings align closely with the agency’s prior warnings. Regulators have long cautioned that generic, off-the-shelf compliance programs are inadequate. As FINTRAC has consistently emphasized, firms must demonstrate “a culture of compliance, with clear evidence of board-level or senior officer oversight.”

Enforcement Trends and Sectoral Impact

The case is emblematic of broader enforcement trends. FINTRAC reported that it issued 12 Notices of Violation in the 2023–2024 fiscal year, levying over $26 million in penalties across a range of financial entities. Since gaining the authority to issue monetary penalties in 2008, the agency has imposed more than 140 such sanctions.

While large banks and financial institutions remain under constant scrutiny, the regulator is increasingly turning its attention to non-bank financial intermediaries, including securities dealers and wealth management firms like Hub Capital. These businesses, often handling high-value or complex transactions, are now seen as critical points of vulnerability within Canada’s AML ecosystem.

Importantly, FINTRAC reiterated that administrative penalties are “explicitly non-punitive.” Their objective is corrective: to “drive meaningful change in behavior and ensure sector-wide adherence to AML standards.” Nonetheless, the reputational costs of public disclosure are high. Firms that face enforcement must deal with client mistrust, potential partner hesitations, and industry scrutiny.

Risk Assessment: The Keystone of AML Compliance

The case highlights the centrality of risk assessment in Canada’s AML regime. FINTRAC requires firms to conduct regular, in-depth assessments of the money laundering and terrorist financing risks specific to their operations. These assessments must be documented and must address a broad range of risk vectors, including transaction types, client characteristics (such as politically exposed persons), geographic risk, and service delivery channels (online versus in-person).

Critically, risk assessments must be revisited and updated as business models evolve. This is not a “one-and-done” process. Rather, it is meant to inform every component of an AML program—from client onboarding and transaction monitoring to staff training and escalation procedures.

Hub Capital’s failure to produce a documented risk assessment was, in FINTRAC’s view, a foundational flaw. For smaller or independent firms, this lapse often stems from limited internal compliance resources or underestimation of the firm’s exposure to financial crime threats.

Institutional Oversight and Accountability

Another major failing was the absence of senior-level oversight. Under the PCMLTFA, written compliance policies and procedures must be reviewed and approved by a senior officer or the board of directors. This requirement signals that AML compliance is not just a back-office function but a matter of institutional governance and accountability.

Firms must also conduct periodic reviews of their policies, procedures, and program effectiveness—ideally through independent audits. In today’s fast-evolving financial landscape, outdated policies can quickly become blind spots for criminal exploitation. FINTRAC expects firms to be “proactive, not reactive” in their compliance posture.

Human Capital: Training and Internal Testing

An effective AML program depends heavily on people. Staff at all levels—client-facing employees, compliance personnel, and executives—must be trained to understand their roles and recognize red flags. FINTRAC warns that training should not be treated as a “box-ticking exercise.” Instead, it must reflect the firm’s actual risk environment and be refreshed regularly.

The same applies to reviews. Testing the adequacy of policies, client onboarding processes, monitoring systems, and training quality is essential. These reviews must be documented and ideally conducted by individuals not directly involved in program implementation, ensuring objectivity and credibility.

Implications for the Sector and Best Practices Going Forward

The Hub Capital case is a cautionary tale for financial firms of all sizes. No longer can smaller institutions assume that regulatory scrutiny will bypass them. The growing frequency and severity of FINTRAC’s enforcement actions suggest that “regulatory expectations in Canada are rising.”

To protect against similar enforcement, all reporting entities should adopt the following best practices:

• Maintain up-to-date, tailored AML policies and procedures with formal senior management approval;

• Conduct detailed, documented risk assessments aligned with FINTRAC’s expectations;

• Implement ongoing, role-specific training with clear records of participation and content updates;

• Undertake independent reviews or audits of the AML regime, ideally on an annual basis;

• Establish clear lines of accountability to senior officers or boards of directors.

Firms that embrace these practices will be better positioned to demonstrate both compliance and a genuine commitment to ethical operations.

Conclusion: A Wake-Up Call for Canadian Financial Firms

FINTRAC’s administrative penalty against Hub Capital sends an unambiguous message: no financial intermediary is beyond the scope of AML enforcement. The case underscores the importance of comprehensive risk assessments, documented policies, meaningful training, and executive accountability. As FINTRAC puts it, “effective AML compliance is not just a regulatory obligation but a cornerstone of responsible business.”

With money laundering tactics becoming more sophisticated and the financial sector more fragmented, regulators are shifting from tolerance to enforcement. The lesson for firms—large and small—is clear: AML compliance must be treated as a dynamic, continuous process, not a checkbox on a form. Public disclosures and rising penalties make the risks of non-compliance not just financial—but reputational and existential. 

By fLEXI tEAM