TD Bank Faces Record $3 Billion Fine for Money Laundering Failures
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TD Bank, one of Canada’s largest financial institutions, has agreed to a staggering settlement of over $3 billion (£2.3 billion) and has pleaded guilty to criminal charges in the United States. This legal action stems from the bank’s failure to prevent drug cartels and other criminal organizations from transferring hundreds of millions of dollars in illicit funds through its accounts.
According to prosecutors, TD Bank operated with insufficient safeguards against money laundering for nearly a decade. The institution failed to take action even when employees flagged suspicious activities, such as a customer making daily cash deposits of $1 million. As a result, the bank now faces restrictions on its growth in the US, alongside the largest fine ever imposed under anti-money laundering laws.
Bharat Masrani, the bank’s CEO, publicly accepted responsibility for these failures. He stated that TD Bank has the financial resilience to absorb the repercussions and is committed to making the necessary investments and changes to improve its anti-money laundering program. “This is a difficult chapter in our bank’s history. These failures took place on my watch as CEO, and I apologize to all our stakeholders,” he expressed during a press conference.
The process of reforming the bank’s anti-money laundering practices is expected to be multi-year, but the bank has already initiated some changes, including the hiring of more than 700 specialized staff in this area. Masrani announced last month that he would retire in April 2025, after a decade at the helm.
The US Justice Department has noted that TD Bank is the largest lender in history to plead guilty to violations of the Bank Secrecy Act, marking a significant milestone in the realm of financial accountability. Additionally, it is the first bank to plead guilty to conspiracy to commit money laundering, raising alarm bells in regulatory circles.
The restrictions on TD Bank’s US retail operations, a rare consequence for such severe misconduct, are reminiscent of penalties applied in other major scandals, such as the fake account fraud uncovered at Wells Fargo. Attorney General Merrick Garland emphasized the seriousness of the situation, stating that the bank’s convenient services had unwittingly made it complicit in criminal activities.
Officials revealed that TD Bank had “starved” its compliance programs of necessary investment while the bank expanded its operations. By 2018, it had failed to monitor over 90% of the transactions processed through its network, amounting to more than $18 trillion in activity. The internal culture around compliance was so lax that employees reportedly joked that the bank’s slogan—“America’s most convenient bank”—was aimed at attracting criminals.
Among the disturbing details presented by US officials, one customer was able to launder over $470 million in drug proceeds, making substantial cash deposits and even bribing bank staff with gift cards. This operation facilitated the flow of payments from fentanyl users back to drug networks based in Mexico and China.
In another case, a group of five bank employees aided in issuing dozens of ATM cards, enabling the transfer of $39 million in illicit funds to Colombia. These revelations underscore the systemic issues within TD Bank’s operations, highlighting a culture that prioritized convenience over compliance.
With over 27.5 million customers globally, TD Bank ranks as the sixth largest bank in North America by assets. The recent settlement will include a period of external monitoring to ensure compliance with regulatory standards moving forward.
The penalties imposed on TD Bank include $1.8 billion payable to the Justice Department and $1.3 billion to the Treasury’s Financial Crimes Enforcement Network, along with additional payments to other regulators, including the Office of the Comptroller of the Currency and the Federal Reserve.
In response to the news, TD Bank’s shares plummeted more than 5%, reflecting investor concerns about the long-term implications of the settlement and the bank’s reputation. As TD Bank navigates this challenging chapter, the focus will be on implementing robust compliance measures to prevent future violations and restore trust among its stakeholders.
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