TD Bank has agreed to pay $3 billion in penalties to the U.S. Department of Justice and the U.S. Treasury Financial Crimes Enforcement Network, making it the largest bank in U.S. history to violate the Bank Secrecy Act. It also became the first U.S. bank that failed to monitor money laundering by drug cartels and other criminals.
As part of this settlement, TD Bank has agreed to forfeit $452 million to the DOJ and to retain an independent compliance monitor for three years. TD Bank will also enforce and enhance its Anti-Money Laundering compliance program to prevent future criminal activity.
TD Bank was also ordered by the Office of the Comptroller of the Currency to restrict the growth of TD Bank’s two U.S. banking subsidiaries and a $450 million civil money penalty. In addition, the Federal Reserve Board followed with its release of charging TD Bank for $123.5 million for violations in the AML compliance program.
Over the years, TD Bank, which is the tenth largest commercial bank in the U.S., has allowed problems in its transaction monitoring program to persist without significant changes.
Despite repeated concerns that were flagged since 2014, the bank remained effectively static and failed to address these known issues.
“TD Bank chose profits over compliance with the law — a decision that is now costing the bank billions of dollars in penalties,” Attorney General Merrick Garland stated in a DOJ press release. “Let me be clear: our investigation continues, and no individual involved in TD Bank’s illegal conduct is off limits.”
Federal regulators also denounce TD Bank’s failure to take responsibility, undermining its internal efforts and creating an environment that allowed financial crime to flourish.
“For over a decade, TD Bank allowed its AML program to languish, making TD Bank a target for illicit actors—including its own employees,” Financial Crimes Enforcement Network Director Andrea Gacki stated.
In 2022, TD Bank failed a supervisory over a money laundering case with a man named Da Ying Sze. Sze has laundered $653 million in total and $470 million went through TD Bank. Most of these transactions were deposited with large sums of cash through the teller window in the TD Bank branch in New York. Prosecutors noted that his financial crimes were evident to any attentive observer.
Following the announcement by federal regulators, TD Bank’s market value plummeted 6.22% from the previous day’s close. By the subsequent close, it was down 9.74%.
“This is a difficult chapter in our bank’s history,” TD Bank CEO Bharat Masrani said in a statement. “These failures took place on my watch as CEO and I apologize to all our stakeholders.”
