Money Laundering Bank “TD Bank” fined $3bn in historic settlement

TD Bank, one of Canada's biggest lenders, has agreed to pay more than $3bn (£2.3bn) and pleaded guilty to criminal charges in the US after allowing drug cartels and other criminals to transfer hundreds of millions of dollars in illicit funds.

TD Bank was fined $3 billion for significant lapses in its anti-money laundering controls, which allowed drug cartels and other criminals to launder hundreds of millions of dollars through its accounts.

The bank pleaded guilty to conspiracy to commit money laundering, marking the largest case in U.S. history.

Key issues included:

• Criminal Networks: At least three money laundering networks moved over $670 million through TD Bank accounts, including
1. One customer who used TD Bank to launder more than $470m in drug proceeds, making large cash deposits and bribing staff with gift cards.
2. Five bank staff helped issue dozens of ATM cards, facilitating the transfer of $39m in illicit funds to Colombia.
• Systemic Deficiencies: Over nearly a decade, TD Bank had pervasive issues in its anti-money laundering policies 
• Failure to Act: Despite warnings from regulators and internal auditors, the bank did not address these deficiencies 
• Employee Complicity: Some employees were bribed with gift cards to process suspicious transactions

The bank has since taken steps to improve its anti-money laundering program, including appointing new leadership and adding hundreds of specialists  

The BBC reported

Prosecutors said the bank operated with inadequate guards against money laundering for nearly a decade, failing to act even when staff flagged apparent cases of abuse, such as a customer making daily cash deposits of $1m.

The lender is now facing restrictions on its growth in the US and the most significant fine ever under anti-monetary laundering law.

The chief executive of TD Bank said the bank was taking "full responsibility" for its failures.

Bharat Masrani said the bank had the financial strength to weather the situation and would make "the investments, changes, and enhancements required to deliver on our commitments."

The bank said it would be a multi-year process, but it had already taken some steps to overhaul its anti-money laundering programme, adding more than 700 new staff specialised in the issue.

"This is a difficult chapter in our bank's history. These failures took place on my watch as CEO, and I apologise to all our stakeholders," he said on Thursday.

Mr Masrani announced he would retire in April 2025 after a decade at the bank's helm.

The US justice department said TD Bank is the largest lender in US history to plead guilty to failures under the Bank Secrecy Act and the first to plead guilty to conspiracy to commit money laundering.

The growth restriction its US retail business faces under its agreement with regulators is unusual - reserved for severe cases of wrongdoing, such as the fake account fraud uncovered at Wells Fargo several years ago.

Attorney General Merrick Garland said the bank cooperated with the investigation, and further individual prosecutions were expected.

“By making its services convenient for criminals, TD Bank became one,” he said.

At a press conference announcing the charges, US officials said the bank - the 10th largest in the US - had "starved" its compliance programmes of investment, even as it grew.

Prosecutors said at a press conference that by 2018, it failed to monitor more than 90% of the transactions on its network, activity worth more than $18tn.

The gaps in compliance were so well-known internally that staff joked that the bank's motto - "America's most convenient bank" - was marketed toward criminals, they said.

Officials said one customer used TD Bank to launder more than $470m in drug proceeds, making large cash deposits and bribing staff with gift cards.

The scheme allowed payments from fentanyl users to flow back to drug networks in Mexico and China, officials said.

Officials said another scheme involved five bank staff members, who helped issue dozens of ATM cards, facilitating the transfer of $39m in illicit funds to Colombia.

TD is the sixth-largest bank in North America by assets and serves over 27.5 million customers worldwide.

The settlement announced on Thursday will include a period of outside monitoring.

The penalties include $1.8bn to the Justice Department and $1.3bn to the Treasury's Financial Crimes Enforcement Network, as well as payments to other regulators, including the Office of the Comptroller of the Currency and the Federal Reserve.

Shares plunged more than 5% on the news.

Source:  

1. TD Bank fined $3bn in historic money laundering settlement. https://finance.yahoo.com/news/canada-bank-made-itself-convenient-190400492.html.
2. TD Bank agrees to a $3bn settlement over money laundering charges. https://www.fstech.co.uk/fst/TD_Bank_Agrees_3_Bn_Settlement.php.
3. TD Bank to pay $3 billion in historic money-laundering settlement with .... https://apnews.com/article/td-bank-money-laundering-justice-department-75426a569d40174fd61fa7bc83026176.
4. TD Bank to pay $3 billion after breaking U.S. money laundering rules. https://www.cbsnews.com/news/td-bank-money-laundering-3-billion-fine-settlement/.
5. https://www.bbc.co.uk/news/articles/c153d14vqwyo