Canada’s Banking Regulator Warns of Heightened Anti-Money-Laundering Risks Amid Multiple Events

Canada’s banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), has acknowledged a growing risk to banks related to anti-money-laundering (AML) issues, which it says have "risen in prominence" in recent times. According to OSFI, this rise is due to a series of events impacting the financial sector.

Peter Routledge, OSFI's director, commented on the matter, saying, “There are anti-money-laundering issues that are publicly known and there are ones that we’re aware of that we don’t disclose because it’s part of the regulatory process.”

Speaking to reporters in Canada, Routledge avoided discussing specific banks but stressed the importance of addressing these risks across the industry. “In the last year, to be clear, the incidence of anti-money-laundering issues has caused us to elevate that risk,” he said, as reported by *The Globe and Mail*. He further explained, “And it’s not a single event. There have been a bunch of events that have caused us to think about that.”

Although Routledge did not name any particular institutions, TD Bank, Canada’s second-largest bank, has been at the center of several AML-related issues. The Toronto-based lender revealed in August that it had set aside $3 billion to cover potential penalties related to these issues, which have primarily surfaced in its U.S. operations. TD’s rapid expansion in the U.S., where it now operates over 1,000 branches, has been accompanied by allegations of serious regulatory lapses, including inadequate customer screening processes and reports of staff accepting bribes.

OSFI has faced criticism over TD’s situation, with some analysts suggesting that the regulator should have detected the bank's AML problems sooner. Responding to this scrutiny, Routledge acknowledged the evolving nature of AML risks, noting that his understanding of the issue has deepened. “That is a problem that has a transnational factor associated with it. And it is a risk that is more significant than I appreciated three years ago,” he said.

By fLEXI tEAM