Shakeup at TD Bank: Compliance Chief Departs, Citi Veteran Takes Helm

In a significant leadership change, TD Bank has announced the departure of its Chief Compliance Officer, Monica Kowal, who joined the bank in 2017. Erin Morrow, the Deputy Chief Compliance Officer, will be stepping up to fill the role, reporting directly to the Chief Risk Officer, Ajai Bambawale, according to an internal memo obtained by Reuters.

Navigating Regulatory Challenges: TD Bank's Compliance Overhaul

Compliance Chief's Departure Raises Questions

The memo from Bambawale did not provide any details on the reasons behind Kowal's departure, leaving industry observers to speculate on the circumstances surrounding her exit. This development comes at a critical juncture for TD Bank, as the institution has been grappling with regulatory scrutiny and the need to strengthen its anti-money laundering (AML) practices.

Citi Veteran Tapped to Lead Compliance Efforts

Erin Morrow, who joined TD Bank in January, brings a wealth of experience from her previous role at U.S. banking giant Citi, where she spent over a decade honing her compliance expertise. Her appointment signals the bank's commitment to bolstering its regulatory compliance capabilities and addressing the shortcomings identified in its AML program.

Revamping the Compliance Team: Hiring Spree from Citi and BMO

In addition to Morrow's promotion, TD Bank has been actively recruiting compliance professionals from other financial institutions. The bank has brought on Marcy Forman and Jacqueline Sanjuas from Citi, as well as Herbert Mazariegos, the former Chief Global Anti-Money Laundering Officer at BMO, to strengthen its compliance team.

Investing in Training and Onboarding to Enhance Compliance

TD Bank has acknowledged the need to invest heavily in its compliance efforts, committing over 0 million to training programs and onboarding hundreds of AML professionals. This strategic move underscores the bank's determination to address the deficiencies in its AML monitoring, detection, and reporting processes, which CEO Bharat Masrani has publicly described as "unacceptable."

Bracing for Potential Penalties: Provisions and Anticipated Fines

The bank has already set aside an initial provision of 0 million to cover potential penalties, and industry analysts have speculated that the total fines could reach as high as billion. This significant financial exposure highlights the gravity of the compliance issues facing TD Bank and the need for a comprehensive overhaul of its regulatory compliance framework.

Rebuilding Trust and Reputation: A Crucial Challenge

The leadership changes and the substantial investments in compliance reflect TD Bank's recognition of the importance of regaining the trust of regulators and the public. As the bank navigates this challenging period, its ability to effectively implement the necessary compliance measures and restore its reputation will be crucial to its long-term success and continued growth.