TD Bank Now Says Plans To Open Branches Has Slowed

September 7, 2024

TD Bank now says plans to open branches has slowed as it tackles its anti-money laundering issues and sets aside money for penalties.

TD Bank is currently under civil and criminal investigations regarding its U.S. anti-money laundering (AML) program.

These probes are linked to allegations that traffickers laundered over $653 million associated with fentanyl through the bank, with claims that bank employees were bribed by criminals.

In response to these AML issues, TD’s expenses have increased significantly, reports Banking Dive.

The bank has allocated approximately $3.57 billion for potential penalties and fines related to these matters and anticipates reaching a “global resolution” by the end of the year.

To address the situation, TD has invested in enhancing its risk management and control systems, with last quarter’s expenses totaling $11 billion.

Executives expect AML-related costs to peak in early 2025.

Last year, TD announced plans to open 150 new branches in the U.S. by 2027, following the unsuccessful attempt to acquire First Horizon for $13.4 billion.

However, analysts are concerned that the ongoing AML investigations could hinder the expansion of the bank’s U.S. operations.

Leo Salom, TD’s U.S. CEO, acknowledged the uncertainties surrounding the branch opening plans during a May meeting with analysts, stating that more clarity would be provided when possible.

While TD’s CEO Bharat Masrani did not share specific updates on the branch plans, he emphasized that resolving the AML issues remains the bank’s top priority.

He noted that the U.S. division, which serves around 10 million customers, has been performing well.

TD representatives did not immediately respond to inquiries about the revised branch opening numbers or any potential employee terminations or compensation changes.

Regarding lessons learned from the AML situation, Masrani highlighted the importance of establishing clearer accountabilities across different risk areas and ensuring timely communication of critical information to the appropriate staff within the organization.

He acknowledged that, in a bank of TD’s size, there can be challenges in maintaining clear accountability.

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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.

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

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