Brief: No Ransom, No Rescue? Why Canadian SMBs Can’t Wait for a Payment Ban to Get Serious About Ransomware. In 2025, that tiger is ransomware. And for Canadian businesses still relying on “hope” as their incident response plan, it’s already too late. While the UK and other nations move to ban ransom payments, most Canadian SMBs remain unprepared—technically, operationally, and financially—to withstand an attack without paying up.
“You don’t negotiate with a tiger when your head is in its mouth.” — Winston Churchill
The Global Shift Towards Ransomware Payment Bans
In early 2025, the United Kingdom launched a public consultation proposing a ban on ransomware payments for all public sector organisations and those classified as critical national infrastructure (CNI). The move follows a string of high-profile cyber incidents and aligns with the Counter Ransomware Initiative—a coalition of 48 countries, including Canada, that have pledged to reduce the financial incentive for cybercriminals.
The proposed UK ban isn’t limited to central government. If enacted, it would apply to any organisation delivering essential services—transportation, finance, energy, healthcare, food supply chains—and could significantly disrupt the ransomware economy. It would also force both public and private organisations to take recovery preparedness seriously.
While Canada hasn’t yet enacted similar legislation, momentum is building. In its 2025 update to the National Cyber Security Strategy, Public Safety Canada acknowledged the growing need for cohesive action across the public and private sectors to address the threat posed by ransomware and other forms of cyber extortion. But unlike the UK, the Canadian federal government has not yet moved to restrict ransom payments, leaving businesses in a legal grey zone.
What This Means for Canadian SMBs
Canadian SMBs, particularly in healthcare, finance, legal services, and manufacturing, are increasingly in the crosshairs of ransomware gangs. Unlike large enterprises, most SMBs don’t have the bench strength or budget to run mature cyber programs—and attackers know it. According to the Business Development Bank of Canada (BDC), 12% of small businesses reported experiencing a cyberattack in 2024, with ransomware being one of the most financially and operationally damaging threats. (BDC)
The implications of a ransomware payment ban for Canadian SMBs are significant:
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Insurance Disputes: If your business pays a ransom and it’s later ruled unlawful—or excluded under policy terms—your insurer could deny the claim. Many cyber liability policies already exclude ransom payments unless specific conditions are met.
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Operational Downtime: Without the ability to pay and decrypt data, your business must rely entirely on backup and recovery infrastructure. That’s a problem for many SMBs still using outdated or improperly configured systems.
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Legal and Regulatory Risk: Paying a ransom may violate federal sanctions laws, especially if the attackers are linked to designated foreign entities. It may also expose your business to scrutiny under PIPEDA or provincial privacy legislation if notification timelines are not met.
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Moral Hazard: Funding cybercriminals risks encouraging further attacks—on you or others. As governments shift toward a “no payment” stance, businesses that pay may find themselves isolated or unsupported.
Ransomware Is Evolving—Fast
It’s worth noting: ransomware in 2025 isn’t just about encrypted files. Many attacks are “double extortion”—where threat actors both lock your systems and exfiltrate sensitive data, threatening to leak it unless you pay. A growing number of ransomware gangs also use distributed supply chain attacks to move laterally across networks, targeting MSPs and software providers.
Microsoft’s 2024 Digital Defense Report noted a 2.75x increase in human-operated ransomware encounters globally. That means real actors—not just automation—are targeting specific industries and organisations. In Canada, sectors like healthcare and law remain at high risk due to the nature of the data they store and process. (Microsoft Digital Defense Report)
The Changing Role of Cyber Insurance
Cyber insurance in Canada is undergoing a rapid shift. The market is projected to grow from $0.56 billion in 2025 to $1.22 billion by 2030, but that growth is being accompanied by stricter underwriting requirements, higher premiums, and lower payout ceilings. (Mordor Intelligence)
Insurers are no longer writing blank cheques. Here’s what’s changing:
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Exclusions for ransomware payouts unless the insured meets specific technical criteria
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Cooperation clauses requiring law enforcement notification and coordination with insurers
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Mandated controls, including MFA, EDR, offsite backups, and IR plans
If ransom payments are banned outright, expect insurers to shift further—offering coverage only to companies that can prove they have the ability to recover without paying.
Real-World Lessons: Recovery Without Paying
We’ve already seen organisations refuse to pay and still recover—but it’s not easy.
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LoanDepot, a major US mortgage lender, refused a $6 million ransom in 2024. The business instead absorbed over $17 million in recovery costs, citing geopolitical risk and the potential for sanction violations as reasons to decline payment. Customers were redirected to phone and mail services for weeks.
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Fujifilm shut down global networks in 2021 and recovered from secure backups after an attack. It had an incident response task force and external support ready.
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The British Library took months to rebuild its digital infrastructure in 2023, choosing not to pay ransom after a legacy system was exploited. The organisation gained public praise for transparency and long-term planning.
In contrast, Colonial Pipeline paid a $4.4 million ransom in 2021—only to recover just a portion of the funds and face reputational damage.
Canadian Context: You Don’t Have the Budget for Guesswork
F12 works with thousands of Canadian SMBs. We know the reality: most businesses don’t have a million-dollar incident response budget, let alone multiple redundant data centres. That’s why “resilience by design” is critical.
Whether a ransom ban happens or not, your business needs to:
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Know where its data lives and how it’s backed up
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Detect threats early—before they spread
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Respond fast—with a tested playbook, not panic
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Meet insurer requirements proactively—before renewal
Waiting for legislation is not a strategy. Paying ransom is not a strategy. Hope is not a strategy. Resilience is.
What Canadian Businesses Should Do Now
Here’s how to get ahead of both the attackers and your insurer:
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Implement Immutable Backups: Ensure your backups are encrypted, segmented, and cannot be altered by attackers. Store them offsite or in secure cloud environments.
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Conduct a Ransomware Readiness Assessment: Understand your exposure, identify gaps in controls, and benchmark your recovery time objectives (RTOs).
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Review Your Insurance Policy: Understand what is—and is not—covered, and identify any ransomware-specific clauses or exclusions.
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Partner with an MDR Provider: Managed Detection and Response (MDR) gives you 24/7 monitoring and containment support. It’s a game-changer for SMBs who can’t staff a SOC.
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Run Tabletop Exercises: Simulate ransomware incidents to test your response plan, assign roles, and refine escalation paths.
F12 offers all of the above as part of our integrated Cyber Security suite for Canadian SMBs.
Not sure if your business could recover from a ransomware attack—without paying?
F12 helps Canadian SMBs build real resilience: tested backups, 24/7 detection, insurance-ready incident response, and a clear plan. Start with a free Ransomware Readiness Review. No pressure. Just insight. 👉 Book your review today
FAQs: Ransomware Payment Bans and Canadian Cyber Security Risk
1. Is it illegal to pay a ransom in Canada after a ransomware attack?
No. As of 2025, there is no law banning ransom payments for private Canadian businesses. However, payments could violate insurance terms or federal sanctions laws.
2. Could Canada ban ransomware payments like the UK and US?
Yes, particularly for critical infrastructure. While not yet law, discussions are advancing within Public Safety Canada and the international cyber policy community.
3. Will cyber insurance cover ransom payments in Canada?
It depends. Some policies cover ransom payments with restrictions. Others exclude them entirely. Insurers are moving toward requiring resilience instead of payout.
4. What happens to Canadian SMBs if ransom payments are banned?
Without resilience measures in place—tested backups, response plans, detection tools—Canadian SMBs risk longer outages and financial loss. Insurance won’t be enough.
5. How can Canadian businesses prepare for ransomware without relying on payment?
Start with layered defence: backups, endpoint protection, MDR, staff training, and a tested IR plan. F12 offers this in one managed service model.
