Senator Colin Deacon summarised the impact of the fine TD Bank was hit with after the US Innvestigation assessed they knowingly worked to avoid AML rules and thuse became criminals themselves. This United States Attorney General Merrick Garland humiliated this Canadian bank over something so fundamental.
AML rules are intended to eliminate one aspect of the transfer of cash or funds from being criminal proceeds to legitimate business proceeds.
Deacon is correct in thei being a humiliation for Canada, yet OSFI have been silent on this matter, something I find even worse.
Here is a short piece on thereaction of OSFI chief Routlege which is staggerring, particularly the final few words of this quote.
Pressed further, the Superintendent said that while the TD issues were in the US and not Canada, he believes OSFI fulfilled its obligations to ensure that any regulated FI based in Canada is managing prudential risks that threaten the health of the organization. He added that TD is “prudentially sound on objective measures.”
This reaction from OSFI fails to reassure anyone about Canadas stance on AML and the Superintendent should be investigated for apparently suggesting TD were incorrectly charged.
Here follows Deacons quote on Linkedin, which I believe has the right tone.
“TD Bank created an environment that allowed financial crime to flourish. By making its services convenient to criminals, it became one.”
“TD Bank chose profits over compliance in order to keep its costs down. That decision is now costing the Bank billions of dollars.”
Those are the words of United States Attorney General Merrick Garland as he announced the largest ever (US$3 BILLION) penalty of its kind.
What a humiliating day for Canada.
The world can now point to TD Bank, and this case, as powerful evidence that fraud and other financial crimes have been accommodated by Canadian banks and our financial regulators. That is the harsh reality of this moment.
Canada’s reputation as the home to the globe’s most trusted, safe and reputable banks has been dealt a humiliating and devastating blow. The facts in this case are deeply troubling.
For six years, I have been doing what I can to encourage the last two Ministers of Finance Canada / Finances Canada to give Canadians control over their financial data, to integrate new financial technologies into our financial system, and to encourage made-in-Canada competition. I’ve not been successful. The strategic and steady spreading of fears, uncertainties and doubt (FUD) slowed progress to a crawl and reinforced the status quo while the rest of the world raced ahead.
Surely, this case proves that the status quo is no longer an alternative — that what we’ve been doing is NOT working. We MUST turn this moment into an inflection point, and do what it takes to turn this massive blow to Canada’s global reputation into a positive. But how?
Our big banks can never again be granted the position of dominance that they have occupied, especially as it relates to policy decisions in Ottawa. Our financial sector policy decisions (federally and provincially) MUST start to meaningfully include Canadian innovators, not just our biggest incumbents.
Our regulators need to change how they are regulating. Competition and disruptive alternatives to the status quo can no longer be pushed aside because of resistance from the big banks.
We must finally choose to prioritize the eradication of fraud and money-laundering here at home. Some early progress has been made from a policy standpoint, but the TD Bank case highlights an utter lack of operational progress. Let’s decide today, to build the world’s best and most innovative crime-fighting tools, and a financial innovation ecosystem that solves our own problems — and then go and sell those services to a world that also needs them.
We must transform our financial system FROM one that fosters an organization is issued the biggest penalty of its kind, and TOWARDS one where we become the world’s best, most sophisticated financial crime fighting cops. (Don’t think we can? Just look at Newfoundland’s Verafin as an example of what our financial innovators can achieve… and then do a LOT more of that.)
Let’s turn humiliation into opportunity.
Bankwatch 