TD Bank May Now Fire CEO Amidst Money Laundering Investigation

August 28, 2024

TD Bank may now fire its CEO amidst its money laundering investigation, according to a Reuters shareholder report.

TD Bank’s ongoing challenges with its anti-money laundering (AML) controls may lead to a change in leadership.

According to a Reuters report from August 28, which cites interviews with ten shareholders and two analysts, a new CEO is expected to be appointed in 2025.

Many shareholders believe that an external candidate with experience in the U.S. banking sector would be ideal to lead the bank once it addresses its AML issues.

The bank recently set aside a whopping $2.6 billion to cover its AML penalty and said it would sell a part of its stake in Charles Schwab to offset its losses.

Ben Jang, a portfolio manager at TD shareholder Nicola Wealth, noted, “Once we get past these rocky waters, and there is a little bit of light at the end of the tunnel, maybe that will help create more clarity for leadership change.”

A TD Bank spokesperson stated that the bank has a solid succession planning process and emphasized the strength of its senior executive team.

The bank declined to comment further, per PYMNTS.

CEO Bharat Masrani, who has led TD for ten years, took the role during a period of expansion into the U.S., where the bank now operates around 1,150 branches—more than in Canada.

This news follows the bank’s recent quarterly earnings report, which included a $2.6 billion provision related to a potential investigation into its AML program, on top of a $450 million provision from the previous quarter.

U.S. regulators are scrutinizing TD’s AML practices, prompting the bank to initiate a remediation of its program.

Earlier this year, TD dismissed over a dozen employees, some facing criminal charges and disciplinary action.

The scrutiny of AML practices at financial institutions is increasing.

As reported last month, when banks and fintech firms fail to meet standards, they face significant consequences.

Additionally, ongoing discussions may lead to changes in the regulations governing AML and fraud prevention, as regulators seek input on using advanced technologies to enhance defenses in financial institutions.

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Also Read: The US Treasury Direct is Now Freezing Customer Accounts

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Citibank now fires a whistleblower for ‘underperformance’, after the former employee provided records requested by the OCC.

Citi has filed a countersuit against its former employee, Kathleen Martin, alleging that she was terminated not for refusing to falsify records for the Office of the Comptroller of the Currency (OCC), as she claimed in her lawsuit from May, but rather for being unable to properly fulfill the duties of her role.

Martin, who was let go from her position as Citi’s interim data transformation chair in September 2023 after nearly two years with the bank, had alleged in her lawsuit that she was fired for not agreeing to Chief Operating Officer Anand Selva’s request to conceal information from the OCC that would make the lender “look bad.”

In a revised lawsuit, Kathleen Martin has accused Citi’s Chief Operating Officer Anand Selva of intentionally deceiving the bank by wanting to misrepresent Citi’s compliance metrics to the Office of the Comptroller of the Currency (OCC).

Martin claims Selva sought to conceal information from the OCC that would have made the bank “look bad.”

However, Citi maintains that Martin’s termination in September 2023 was not due to her refusal to falsify records, but rather because she lacked the necessary “leadership and engagement skills” to effectively execute the role of interim Data Transformation Chair, which she had been appointed to after the previous chair, Rob Casper, departed the company.

Citi asserts that during Martin’s interviews and assessment for the interim role, it was identified that she needed to improve in areas like her “dogmatic nature, lack of innovation and lack of experience driving the execution of complex change across Citi.”

Once Casper left, Citi’s senior leadership, including COO Selva, determined that Martin could not successfully fulfill the demands of the interim chair position.

According to Citi, COO Anand Selva tried to help the plaintiff, Kathleen Martin, improve her performance in the interim Data Transformation Chair role.

Selva allegedly set up one-on-one meetings and working groups to facilitate better collaboration and working relationships with stakeholders.

Selva’s HR team also provided Martin with a senior mentor to support her development.

In May 2023, Citi leadership discussed a plan to improve Martin’s performance.

In July, Selva conveyed Martin’s mid-year review before she raised any concerns about his behavior.

Soon after, Martin contacted HR and expressed fears about her job security.

Citi claims that Martin “felt her position was at risk,” but the bank asserts that internal documents showed she “exceeded expectations” and that CEO Jane Fraser had commended her for her “gravitas” and ability to build “strong relationships” at the bank.

However, Citi says Martin failed to heed the feedback provided, and she was ultimately removed from the Data Transformation Chair role because she lacked the “executive level relationships” and leadership needed to successfully execute the data transformation efforts.

Citi says the data transformation work was too critical for the bank to tolerate Martin’s underperformance.

Citi denies Martin’s claims that she protested the reporting of a key metric accurately or that Selva objected to it.

The bank says Selva and Martin met in September 2023 to discuss reporting certain metrics using red, amber, and green scales.

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Also Read: A Massive US Bank is Now Closing Credit Cards

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