TD Bank Group will spend $1 billion over two years to overhaul its anti-money-laundering (AML) systems after regulatory lapses in the US triggered $3.1 billion in penalties and a freeze on asset growth, as reported by the American Banker last week.
The scale of the program reflects the level of executive attention focused on addressing these regulatory problems, as necessitated by both the severity of past failings and the constraints now imposed by US regulators. The Office of the Comptroller of the Currency has capped TD's US assets, prompting a 10% balance sheet contraction and a retreat from businesses like point-of-sale lending. Executives say they will deploy machine learning and controls to boost investigative productivity, but for now, the program is a costly fix — and a reputational necessity.
While TD's earnings beat expectations last quarter, the outlook remains transitional. New CEO Raymond Chun is steering a multi-pronged restructuring that includes workforce reductions and portfolio repositioning. Yet the question lingers: can technical remediation alone rebuild trust and repair its reputation, or does TD also need to confront deeper cultural factors?
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