If ever there was an opportunity to explore how Canada and the U.S. regulate financial institutions, Toronto-Dominion Bank’s U.S. anti-money laundering debacle is it.
Such drama is rare in Canadian banking. The novelty is driving media coverage, regulatory action and political attention. TD’s deficiencies deserve more than a political pile-on. They are a symptom of a larger challenge, and one not limited to TD Bank. As Canada’s Big Five banks – TD, Royal Bank of Canada, Bank of Montreal, Bank of Nova Scotia and Canadian Imperial Bank of Commerce – expand their U.S. footprint, they are experiencing a regulatory culture shock.
Canadian banks operating in the U.S. have found the transition to the U.S. regulatory environment demanding. As big fish in a small Canadian pond, our bankers don’t have the pull, the connections or the ability to effectively manage the political spectacle that U.S. regulators make of compliance failures.