On Thursday, TD Bank entered a guilty plea to many criminal counts and consented to pay financial authorities and the Department of Justice a staggering $3 billion in fines and other penalties for their failure to keep an eye on the money laundering activities of drug traffickers and other criminals.
As part of the agreement, the Office of the Comptroller of the Currency will place growth restrictions on TD Bank, whose U.S. division is now the 10th-largest American bank by assets. Under that restriction, the combined assets of TD Bank’s two U.S. banking companies cannot exceed $434 billion.
These limitations resemble those that the Federal Reserve placed on Wells Fargo in 2018 in response to what it described as “widespread consumer abuses” at that financial institution.
Attorney General Merrick Garland stated on Thursday that TD Bank “became one” by making its services easier for thieves.
According to Garland, “TD Bank also became the first bank in U.S. history to plead guilty to conspiracy to commit money laundering, and the largest bank in U.S. history to plead guilty to Bank Secrecy Act program failures.”
“TD Bank made a mistake that is already costing the bank billions of dollars in penalties: it prioritized profits over following the law. To be clear, we are still looking into this, and we are not ruling out speaking with anyone connected to TD Bank’s unlawful activities.
At a press conference in Washington, D.C., Garland announced that the bank would have a monitor overseeing its adherence to anti-money-laundering procedures for a period of three years. This was part of a settlement with the Department of Justice (DOJ), which is getting $1.8 billion in connection with the bank’s guilty plea in federal court in Newark, New Jersey.
According to the attorney general, TD Bank knowingly neglected to keep an eye on an astounding $18.3 trillion in customer activity over the course of six years that concluded in October of last year. This oversight allowed three money laundering networks to transfer over $670 million via bank accounts.
Five bank workers were implicated in at least one of those scams, according to Garland.
The attorney general added, “High-level executives knew there were serious problems with the bank’s anti-money-laundering program at different times, including the person who became the bank’s chief anti-laundering officer, but the bank failed to correct them.”
Garland provided reporters with access to electronic correspondence detailing bank workers’ awareness of and worries of suspicious transactions involving a single person, David, who was directly responsible for moving over $470 million in criminal cash through TD Bank locations across the United States.
“You guys really need to shut this down,” a TD Bank shop manager wrote in an email to another store manager in August 2021. Haha, Garland pointed out.
“One TD Bank store employee discovered in February 2021 that David’s network had used cash to buy over $1 million worth of official bank checks in a single day,” according to Garland. “How is that not money laundering a bank off a back office?” the employee questioned.
“Oh, it 100% is,” another TD Bank staffer replied, according to Garland.
According to Garland, the DOJ planned to bring further charges in this instance.
The attorney general said, “My general response to these kind of questions is, we don’t comment on ongoing investigations, but I was indicating that we would expect future cases against individuals,” when asked if that meant prosecuting TD Bank officials.
The second-biggest bank in Canada, TD Bank, will pay the Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, $1.3 billion as part of the settlement announced on Thursday. This is the highest fine that FinCEN or Treasury has ever placed on a depository institution.
Additionally, TD Bank has been placed under a four-year independent monitorship by FinCEN to supervise the necessary correction of its operations.
According to Deputy Treasury Secretary Wally Adeyemo, “the vast majority of financial institutions have partnered with FinCEN to protect the integrity of the U.S. financial system.” TD Bank took the opposite action.
According to Adeyemo, “TD Bank’s persistent failures provided fertile ground for a host of illicit activity to penetrate our financial system, from fentanyl and drug trafficking to terrorist financing and human trafficking.”
The DOJ was looking into how Chinese organized criminal organizations and drug traffickers used TD Bank to launder money from the sale of the lethal opioid fentanyl in the United States, according to a Wall Street Journal story from May.
In response to TD Bank’s failure to “conduct adequate risk management and oversight of its retail banking operations in the United States, resulting in a U.S. subsidiary being used to launder hundreds of millions of dollars in illicit proceeds,” the Federal Reserve Board fined the bank more than $124 million on Thursday for breaking anti-money-laundering laws.
Sen. Elizabeth Warren (D-Mass.) criticized the agreement on Thursday in a statement to CNBC.
Warren claimed that “big banks treat government fines as the cost of doing business.”
“Bad bank executives are absolved by this settlement of any responsibility for permitting TD Bank to be utilized as a criminal slush fund.” Warren stated that there is a need for the Department of Justice and the Office of the Comptroller of the Currency to improve their enforcement of our anti-money laundering laws.
CEO of the TD Bank Group Bharat Masrani remarked, “This is a sad day in our history.”
“We are making the necessary investments, adjustments, and improvements to fulfill our commitments, and we fully accept responsibility for the shortcomings of our U.S. AML program,” Masrani stated.
This is a challenging period in the history of our bank. As CEO, I am sorry to all of our stakeholders for these mistakes that I oversaw,” Masrani stated.
On Thursday afternoon, shares of TD Bank had decreased by over 5%.
The Consumer Financial Protection Bureau ordered TD Bank to pay nearly $28 million in September for repeatedly providing consumer reporting agencies with customer information that contained multiple errors and forgoing more than a year to correct those errors even after becoming aware of them.
