How to Grow After a Regulatory Scandal

Recent enforcement actions against institutions like TD Bank, Solaris SE in Germany, and Starling Bank reveal that the complexity of modern compliance can strain even the best-intentioned organizations. 

These cases highlight the need for a proactive approach to anti-money laundering (AML) technology, showing how a centralized client management and reporting platform can help banks stay ahead of regulatory expectations while supporting long-term growth. 

In today’s competitive financial landscape, balancing growth with compliance is essential. However, for many banks, maintaining that balance has become increasingly difficult, especially in the face of evolving financial crime threats.   

The Case of TD Bank Spotlights the Need to Innovate 

According to a recent article in the WSJ in October 2024, TD Bank faced significant regulatory scrutiny, becoming the largest institution in U.S. history to plead guilty to violations of the Bank Secrecy Act (BSA). The penalties consisting of a $3 billion fine and a $434 billion asset cap, resulted from a multi-year investigation revealing gaps in the bank's AML framework.  

The asset cap limits the bank’s ability to grow its balance sheet, impacting future earnings and market competitiveness while the fine is a one-off financial blow. The asset cap imposes ongoing operational restrictions as it may hinder expansion, investment, and customer acquisition. TD Bank needs to focus on this challenge to its strategic goals and growth trajectory. 

However, this case isn’t merely about penalties; it catalyzes transformation within the industry. 

Rather than casting TD Bank's situation in a negative light, it’s important to view it as an opportunity for reflection. The bank’s rapid growth between 2018 and 2024, while impressive, outpaced its compliance infrastructure. With the ever-changing landscape of financial crime, maintaining a robust, modern AML solution is no longer optional but essential for supporting both operational integrity and sustainable growth.

TD Bank’s experience underscores the value of continued investment in compliance technology and the importance of adapting to emerging threats. This view is further evidenced by FinCEN’s recent “Proposed Rule to Strengthen and Modernize Financial Institutions’ AML/CFT Programs”. 

Silos Challenge Communication and Effective Oversight 

The TD Bank case illustrates the challenges many institutions face when key departments—such as risk, compliance, and operations—operate in silos. As the volume of transactions and customer interactions increases, so does the need for streamlined communication and unified oversight. Without a centralized platform, even the most diligent teams can miss critical insights that could prevent suspicious activities from slipping through the cracks. 

The lesson here is not that TD Bank, Solaris SE, or Starling Bank had gaps in their compliance programs, but rather that these institutions are navigating the same complex environment as many others. Their experiences offer valuable insights into how banks can evolve their AML frameworks to meet today’s demands. 

For example, Solaris SE, a key player in Germany’s fintech sector, was recently scrutinized for its AML controls. The fast-paced growth of its banking-as-a-service (BaaS) model brought in an influx of new partners and customers, creating operational challenges in maintaining real-time monitoring. Like TD Bank, Solaris SE found itself facing issues due to fragmented processes and the lack of a centralized compliance framework. By investing in more integrated, data-driven compliance technology, Solaris SE can ensure its continued success while meeting the demands of regulators in Germany and beyond. 

Starling Bank, too, faced similar pressures as it grew its customer base at an accelerated pace. The bank's rapid expansion, coupled with its status as a digital challenger, necessitated a new approach to compliance. With modern AML technology and a unified operational structure, Starling is well-positioned to enhance its compliance capabilities while maintaining its upward trajectory. 

Centralized Platforms are Key to Success 

A common thread among these cases is the need for a centralized client management and reporting platform —one that allows for seamless collaboration across departments, real-time visibility into risks, and automated AML processes. 

• Unified Data Management 

By consolidating client profiles, transaction histories, and risk assessments into one platform, banks can ensure that all departments are working from a single client view that provides all needed data. This helps mitigate the risk of information falling through the cracks and enhances decision-making. 

• Enhanced Automation 

Advanced AML platforms, powered by AI, machine learning and data analytics, can help banks identify suspicious activity with greater speed and accuracy. For institutions whose solutions struggled to keep up with transaction volume, automation would enable teams to focus on high-risk cases while ensuring consistent monitoring across the board. 

• Real-Time Collaboration 

When departments operate on the same platform, information flows more freely. Whether it’s a Financial Institution’s risk team flagging a high-risk client or a bank’s compliance officers needing real-time insights, a centralized platform fosters collaboration and enables faster, more informed responses to potential threats. 

These three benefits are a direct result of client management and necessary elements for any bank to meet the current pace of regulatory demands. By having a single client view, automating processes, and collaborating in real-time, banks can focus on serving clients instead of compliance.    

Technology Drives Sustainable Growth 

It’s clear that investing in modern AML technology is not just about regulatory compliance—it’s about unlocking growth opportunities. The experiences of TD Bank, Solaris SE, and Starling Bank illustrate that while the initial cost of compliance may seem significant, the long-term benefits far outweigh the short-term savings associated with outdated solutions. 

Far from being isolated incidents, these cases demonstrate the shared challenges many banks face as they scale their operations. By embracing integrated technology solutions, banks can position themselves to grow confidently, knowing their solutions are equipped to handle the complexities of modern financial crime. 

Collaboration Over Criticism 

 Rather than focusing on penalties and enforcement actions, it’s important to emphasize the opportunity for collaboration and innovation. Banks like TD, Solaris SE, and Starling have demonstrated resilience in the face of adversity, and their experiences provide invaluable lessons for the broader financial industry. 

The move toward centralized client management and reporting platforms represents a new chapter in the evolution of banking compliance. These platforms enable institutions to stay ahead of regulatory requirements, enhance internal controls, and ultimately drive sustainable growth. By investing in the right tools and fostering a culture of collaboration across departments, banks can turn compliance challenges into opportunities for innovation. 

In the end, the true cost of neglecting AML technology is not just the risk of regulatory penalties but the missed opportunity to build a stronger, more agile institution. By prioritizing compliance and technology as part of their growth strategy, banks can ensure their long-term success in an increasingly complex and competitive environment. 

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