Industry Committee on Oct. 28th, 2024

[Meg McKee]

We are learning, from the programs that we're putting into place, from the U.S. and our AML program is getting stronger every day.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Since you're only meeting the regulatory minimums, what are the regulatory failings in Canada that would lead to the type of money laundering that went on in the United States?

[Meg McKee]

Our U.S. AML program was not sufficient to address the risk aligned to our business activity. We've enhanced governance and controls. We've invested in new talent, training, process redesign, technology, implementation and revised policies and procedures.

There's more work ahead. Addressing these failures is a top priority.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

You had individuals clearing a million dollars through a bank account in one day and then taking it back out and laundering it. Was there absolutely no internal compliance measures on it that would check for that, regardless of what the regulation is?

[Meg McKee]

Leadership of our U.S. AML team has the necessary expertise. They're focused on this critical work to enhance our program. Significant work is under way to meet our obligations—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

What about in Canada?

[Meg McKee]

We're strengthening our governance and structure, improving our policy risk assessment enhancements to process and controls, and investments in technology—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Okay. I know you're reading the prepared notes by your PR division.

I'll start with RBC.

Would what happened to TD in the U.S. happen to you?

[Ramesh Siromani]

We are committed to actively maintaining and continuously investing in an effective AML program enterprise-wide to detect, deter and improve upon what we do. This is among our highest priorities. Financial crimes are increasingly —

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Can I take that as a yes or no?

[Ramesh Siromani]

We work with regulators—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Is it yes or no?

[Ramesh Siromani]

We are working very hard—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

You're working hard, but it doesn't mean that it can't happen to you.

I'll go to CIBC.

Why is it that the banks don't take the initiative themselves to go higher than what the regulator says and say that they're not going to let this happen at all, regardless of what the regulator says? It appears to me that all the banks do is the bare minimum.

[Diane Ferri]

CIBC has a very strong and comprehensive AML program. We do transaction monitoring on all of our cards—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Are those the notes from TD or am I looking at the screen wrong? Because it sounds exactly the same—very strong AML program, so much so that people in TD were allowed to.... The employees were encouraging people to exchange a million dollars a day going in and out of a bank account and thought this was great.

There's something wrong with all of your compliance measures, and I can't imagine that it doesn't exist here in Canada to the same extent.

I'd like a quick yes or no. I'll start at the top.

Bank of Montreal, can this happen to you in Canada, yes or no?

[Jennifer Douglas]

We follow regulatory compliance very strongly, especially AML.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I take it that's a maybe.

CIBC, we know you were reading the TD notes, so that's a maybe as well.

What about the Royal Bank?

[Ramesh Siromani]

We are actively maintaining and investing continuously in—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Scotiabank, are you a maybe, too?

I want a yes or a no on the money laundering in Canada.

[D'Arcy McDonald]

We take AML very seriously. We're making considerable investments in AML all of the time.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

We all know that TD has already failed in the U.S., and that doesn't mean they have anything in place in Canada.

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Perkins.

We'll now go to MP Badawey for five minutes.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Chair.

My first question is for all of you.

A significant concern relates to vulnerable communities being exploited because of their limited or constrained access to traditional borrowing vehicles, as well as having to turn to credit cards to borrow at substantially higher rates of interest.

For example, a posted interest rate for a credit card from—I'll name you—Bank of Montreal is between 19.99% and 22.99%; Royal Bank is between 19.99% and 22.99%; Scotiabank is 9.99% to 22.99%; and TD Bank is 8.99% to 23.99%. These are the ratios I read online, yet personal loan interest rates for all you in the same order are 6.7%, 6.45%, 6.45%, and 8.99% to 23.99%.

That's a 16%-plus difference. It's a huge margin.

My first question for all of you is: Why is that? Why is there such a huge margin between the credit card interest rates and the personal loan interest rates?

It sounds like you need instructions in terms of who will answer first. I'll go with TD Bank first.

[Meg McKee]

I would say that as an issuer of credit cards, we're focused on designing products as a whole that resonate with our Canadian customers in meeting their needs and expectations. We have a wide variety of cards that are available, cards that have low rates, cards that have no fees, cards that have low fees, cards that are robust with benefits and rewards. We have a very diverse portfolio roster of up to 15 different card products.

We want all of our customers using products that they feel are right for them. That's what we work towards doing, making sure that our customers are sitting on the right products.