TD Bank is now fined $3 billion for failing to monitor illegal cartel money and other criminal groups, WSJ confirmed on Thursday.
“TD Bank agreed to pay more than $3 billion in penalties and accepted limits on its growth in the U.S. as part of a settlement Thursday with regulators and prosecutors over charges it failed to properly monitor money laundering by drug cartels and other criminal groups,” the outlet reported.
TD Bank has agreed to pay $3 billion to settle allegations that it inadequately monitored money laundering activities linked to drug cartels, regulators announced on Thursday.
This settlement includes a record $1.3 billion penalty to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and an additional $1.8 billion to the U.S. Justice Department, along with a guilty plea related to violations of the Bank Secrecy Act.
The U.S. Department of Justice indicated that TD Bank exhibited “long-term, pervasive, and systemic deficiencies” in its transaction monitoring processes.
Attorney General Merrick Garland stated that the bank’s convenient services for criminals effectively made it complicit in their activities.
From January 2018 to April 2024, over 90% of transactions went unmonitored, enabling three money laundering networks to transfer more than $670 million through TD Bank accounts, according to legal documents.
Deputy Treasury Secretary Wally Adeyemo emphasized that these systemic failures caused real harm to American citizens and communities, criticizing TD Bank for prioritizing growth and profit over legal compliance, thus facilitating drug trafficking.
In one notable incident, TD Bank employees collected over $57,000 in gift cards to process more than $470 million in cash deposits from a money laundering network, avoiding mandatory reporting requirements.
The Office of the Comptroller of the Currency (OCC), which regulates banks, noted that TD processed hundreds of millions of dollars in transactions that clearly indicated suspicious activity.
TD Bank CEO Bharat Masrani acknowledged that these failures occurred under his leadership and expressed remorse to stakeholders.
He committed to taking responsibility and enhancing the bank’s anti-money laundering program.
The bank plans to bolster its surveillance efforts by hiring over 700 specialists in financial crimes and implementing new processes to better detect and prevent such risks.
Additionally, TD Bank will be monitored by FinCEN for four years to ensure compliance with the agreement.
The U.S. Federal Reserve has also fined TD Bank and mandated that its anti-money laundering compliance office be relocated to the United States.
Furthermore, the OCC is restricting the bank’s growth in the U.S., similar to actions previously taken against Wells Fargo for consumer abuses.
These regulatory actions surprised Wall Street, leading to a 6% drop in TD Bank’s U.S. shares as investors anticipated increased legal expenses and limited growth prospects.
Despite the penalties, TD Bank stated it has sufficient liquidity to cover the fine and continue operations.
Analysts noted that the market had been hopeful for no growth restrictions, and now TD will need to explore new avenues for growth outside its traditional U.S. retail banking focus.
Concerns have been rising regarding the use of the U.S. banking system by Mexican cartels to launder proceeds from drug sales, with ongoing efforts by Treasury and IRS officials to understand and combat this exploitation of financial systems.
Critics, including Democratic Senator Elizabeth Warren, have argued that the penalties are insufficient, claiming that large banks often view fines as a cost of doing business.
Warren asserted that the settlement allows bad actors within the bank to evade accountability for enabling criminal activities.
Last year, TD Bank also paid $1.2 billion to settle claims related to its involvement in a $7 billion Ponzi scheme orchestrated by financier Allen Stanford, although the bank denied any wrongdoing in that case.
Citi also allegedly helped Mexico launder money after the Fed dropped an enforcement action after the bank cut ties from the country.
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Also Read: TD Bank Now Gets Caught With Illegal Market Manipulation
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