TD’s chief compliance officer departs as bank continues work on anti-money-laundering controls

Toronto-Dominion Bank’s chief compliance officer has departed at a critical moment as Canada’s second-largest lender fixes weaknesses in its anti-money-laundering program amid investigations by U.S. regulators and law enforcement.

In May, The Globe reported that Monica Kowal, then TD’s senior vice-president and chief compliance officer, was jointly overseeing part of the bank’s remediation efforts after Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, or OSFI, ordered the lender to repair deficiencies in its regulatory compliance management (RCM) program following its own probe.

Ms. Kowal left TD on July 2, according to an internal memo seen by The Globe. She “played a key role developing strategies to mitigate regulatory compliance risks and providing advice, thought leadership and guidance on a broad range of regulatory compliance considerations,” chief risk officer Ajai Bambawale said in the memo sent June 28.

The memo did not explain the reasons for her departure and TD declined a request for comment.

TD has tapped deputy chief compliance officer Erin Morrow to take on Ms. Kowal’s previous role, the TD memo said. The bank hired Ms. Morrow in January from New York-based Citibank, where she worked in compliance and auditing for more than a decade. Previously, she worked at Grant Thornton LLP as principal, business advisory services, according to her LinkedIn profile.

“A seasoned and respected leader, Erin has more than 20 years of experience in compliance, audit, and risk management. She has extensive experience working in complex organizations with a global footprint, which will serve her well in this role,” Mr. Bambawale said in the memo sent to bank staff. He added that she “has already made a significant impact within the compliance organization and across the bank, including building the compliance transformation team.”

Ms. Morrow and Ms. Kowal could not immediately be reached for comment.

Ms. Kowal is a lawyer by training and a former regulator, according to her LinkedIn profile. She joined TD more than six years ago and worked in a variety of roles before being appointed senior vice-president and chief compliance officer in November, 2022. She previously worked at the Ontario Securities Commission for more than a decade and served as its vice-chair from 2014 to 2017.

Ms. Kowal was working on the RCM remediation program alongside two vice-presidents of compliance, Denise Morris and Emily Jelich. Ms. Jelich retired from the bank at the end of June.

The Globe reported in May that OSFI had found gaps in TD’s regulatory compliance management program – the nerve centre of its risk controls – during a recent assessment.

The RCM framework includes controls that banks must establish to abide by the various laws and regulations governing their operations in Canada, the U.S. and other countries. OSFI considers it to be a crucial element of a financial institution’s overall risk-management program and includes technology, processes and other oversight functions.

Anti-money-laundering is just one of the regulatory compliance risks that banks are required to manage through an effective RCM program.

TD has also been undergoing lengthy probes by U.S. regulators and the Department of Justice for weaknesses in its anti-money-laundering procedures. Some analysts have estimated that the monetary penalty that is imposed could reach as high as US$4-billion, and have expressed concerns that U.S. regulators could impose limitations on the bank’s ability to expand in its key growth market.