The head of Canada’s banking regulator defended the record of the Office of the Superintendent of Financial Institutions (OSFI) following anti-money laundering issues at TD Bank.
Last week, Bloomberg News reported that two of TD Bank’s U.S. units entered guilty pleas to charges before a U.S. federal judge. The lender will pay nearly US$3.1 billion in fines and penalties following multiple probes into the bank’s failure to prevent money laundering and other financial crimes at U.S. branches.
“Let’s compare records since the financial crisis. There have been over 500 bank failures in the United States, zero in Canada,” Superintendent of Financial Institutions Peter Routledge said in an interview with BNN Bloomberg Wednesday.
“500 to zero is still a pretty good ratio. Zero bank failures indicates we must be doing something well.”
Routledge said there were legal limits on what he could discuss in the interview related to TD’s case. However, he did mention that the money laundering, in this instance, took place in the U.S. “not in Canada.”
“Now we have a supervisory responsibility to oversee the parent and ensure that wherever an institution operates, there aren’t prudential risks that threaten the prudential health of an institution,” he said.
“On that measure, I think we fulfilled our responsibility. TD’s price to book is well above one. It makes ROE (return on equity) well into the mid-teens. As off-putting as this is, the institution is prudentially sound on objective measures,” he said.
On money laundering more specifically, Routledge said it is a broader issue in the system and “we have to do better regulating integrity and security concerns broadly, and AML (anti-money laundering) issues specifically.”
Routledge said he did not consider resigning in the wake of the controversy.
“The issue is very serious, and I’m the best person in the country to manage the issue,” he said.
When asked if anyone at OSFI would be let go due to controversy he said he would not get into personnel matters.
“Two things, rest assured, we own our responsibility to it. What we’re doing, what I can say in response to it is limited by law. Secondly, we are responsible for regulating and supervising institutions. We rely on boards of directors to govern their institutions,” Routledge said.
Routledge also said he cannot comment on whether OSFI would be seeking changes to TD’s board and as supervisor and superintendent.
“Our job is to administer financial statutes therefore it is absolutely inappropriate for a superintendent to ever to contemplate violating any part of the statute,” he said.