FINTRAC Fines Hub Capital Inc. $99,000 for Compliance Failures

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has levied a penalty of CAD 99,000 against Hub Capital Inc., a securities dealer operating in Woodbridge, Ontario, for four serious violations of Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its associated regulations.

The administrative monetary penalty was issued on 21 March 2025 following a compliance examination conducted in 2023. The company has since paid the full amount, and all proceedings have been concluded, according to FINTRAC.

The violations identified by FINTRAC relate to the firm’s internal compliance programme and its obligations under federal anti-money laundering (AML) legislation.

The first violation cited was the company’s failure to develop and implement up-to-date written compliance policies and procedures. These were found to be inadequate in addressing key regulatory requirements, including those related to client identification, ongoing monitoring, and reporting of suspicious transactions or terrorist property. Notably, the firm’s policies also did not incorporate the requirements of a Ministerial Directive concerning North Korea issued in 2017.

In its report, FINTRAC stated that “Hub Capital Inc. did not document and apply the necessary measures in its compliance policies and procedures to meet all of its obligations.”

The second violation involved the firm’s risk assessment practices. FINTRAC found that Hub Capital had failed to fully assess and document the risk of money laundering and terrorist financing associated with its clients, services, and geographic exposure. The methodology used for risk classification was also deemed insufficient, lacking rationale and clarity in determining risk levels.

The third violation related to the absence of a comprehensive employee training programme. Hub Capital did not provide adequate instruction for staff on ministerial directives, ongoing client monitoring, or terrorist property reporting. The training framework was also criticised for lacking detail on delivery methods and scheduling.

The fourth and final violation concerned the company’s internal review process. FINTRAC noted that Hub Capital had not properly evaluated the effectiveness of its AML policies, risk assessments, or training programmes. The prescribed review failed to detail how deficiencies were identified and addressed, nor did it include the conclusions of previous audits.

All four violations were classified as “serious” under federal regulations. The severity of the penalty reflects criteria outlined in section 73.11 of the Act and corresponding regulatory provisions.

FINTRAC is Canada’s financial intelligence unit, tasked with monitoring compliance with laws aimed at preventing money laundering and the financing of terrorism. Its regulatory oversight applies to a wide range of entities, including banks, credit unions, securities dealers, and money service businesses.

Canadian firms engaged in financial services are required by law to establish and maintain robust compliance frameworks. This includes regular risk assessments, employee training, and timely reporting of suspicious transactions.

Administrative monetary penalties are one of the enforcement tools available to FINTRAC to ensure adherence to these standards. Penalties are intended to promote behavioural change and enhance the effectiveness of Canada’s anti-money laundering regime.

This case highlights FINTRAC’s continued scrutiny of securities dealers and financial firms to ensure compliance with Canada’s AML laws. It serves as a reminder that deficiencies in internal controls and oversight mechanisms can lead to significant financial penalties, even for established firms.