Bank of Nova Scotia's New York branch must tighten its money-laundering controls to resolve an enforcement action brought by the Federal Reserve and the New York Department of Financial Services.
Canada's third-largest lender by assets is working to address "deficiencies relating to the branch's risk management and compliance" with the Bank Secrecy Act and the Office of Foreign Assets Control, the regulators said Tuesday in a statement. The order, which doesn't detail any wrongdoing, calls for better oversight of account holders and an internal framework for implementing and managing compliance with regulations.
Dubbed by some investors as the "Bank of No Surprises" for its consistency and low-risk profile, Scotiabank was put on review for downgrade on Nov. 2 by Moody's Investors Service. The rater said the review was prompted by additional risk the bank has taken on by expanding in credit cards and auto loans, while pursuing more growth abroad. Canada's most international bank has operations in more than 55 countries.
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The bank is "serious about fixing the issues," Andrew Chornenky, a spokesman for the Toronto-based firm, said in an e- mailed statement. "We have engaged a third-party firm to provide best practices and ensure that these changes happen as quickly as possible. While standards continue to evolve globally, we have a strong risk-management culture throughout the bank and we are confident we will execute at worldwide standards."