Oct 15, 2024 | Bakersfield, Features, Financial Markets, Los Angeles, Valleys

TD Bank Pleads Guilty to Bank Secrecy Act Violations and Money Laundering, Agrees to $1.8 Billion Penalty

TD Bank N.A. (TDBNA) and its parent company, TD Bank US Holding Company (TDBUSH), pleaded guilty to Bank Secrecy Act (BSA) violations and money laundering charges, agreeing to pay over $1.8 billion in penalties. The plea resolves a Justice Department investigation into the bank’s failure to comply with anti-money laundering (AML) requirements, including lapses in filing accurate Currency Transaction Reports (CTRs).

By Stacy M. Brown | NNPA Newswire Senior National Correspondent

TDBNA admitted to conspiring to neglect its AML program and launder money, while TDBUSH pleaded guilty to causing TDBNA’s BSA compliance failures. The bank’s penalties stem from a coordinated resolution with the Federal Reserve Board (FRB), the Office of the Comptroller of the Currency (OCC), and the Financial Crimes Enforcement Network (FinCEN).

“By making its services convenient for criminals, TD Bank became one,” Attorney General Merrick B. Garland remarked. He noted that TD Bank is now the largest US bank that has pleaded guilty to such charges and emphasized that the investigation remains active.

“Today’s guilty plea…offers an unmistakable lesson: crime doesn’t pay—and neither does flouting compliance,” Deputy Attorney General Lisa Monaco said.

The charges relate to long-term deficiencies in TD Bank’s AML program, spanning from January 2014 to October 2023. According to court documents, despite warnings, the bank failed to address significant risks and enforce necessary controls. Under a “flat cost paradigm,” the DOJ said the bank restricted compliance funding, leaving it vulnerable to money laundering activities involving trillions of dollars.

“These failures allowed corrupt bank employees to facilitate a criminal network’s laundering of tens of millions of dollars,” Principal Assistant Attorney General Nicole M. Argentieri emphasized.

Additionally, US Attorney Philip R. Sellinger for the District of New Jersey described TD Bank’s actions as willful neglect. “The bank willfully failed to monitor trillions of dollars in transactions…allowing hundreds of millions of dollars from money laundering networks to flow through the bank,” Sellinger said.

From 2018 to 2024, TD Bank failed to monitor approximately $18.3 trillion in transactions, including automated clearinghouse (ACH) transactions and high-risk activities. The oversight facilitated over $670 million in money laundering through TD Bank accounts. According to reports, the bank allowed transactions to proceed unreported, even when suspicious.

The bank’s plea agreement includes a forfeiture of $452 million and a criminal fine exceeding $1.4 billion. As part of its AML program improvements, TD Bank will also retain an independent compliance monitor for three years. It reached additional agreements with the FRB, OCC, and FinCEN, with $123.5 million credited towards the FRB’s resolution.

TD Bank’s partial cooperation with the investigation earned it a 20% penalty reduction, although it did not receive full credit due to delays in reporting AML concerns. The Justice Department noted that TD Bank’s non-disclosure contributed to imposing a substantial fine.

The IRS Criminal Investigation Division, the FDIC Office of Inspector General, and the DEA investigated the case with support from several law enforcement agencies, including the Morristown Police Department and US Customs and Border Protection.

The case was prosecuted by attorneys from the Justice Department’s Criminal Division and US Attorneys from New Jersey. The Bank Integrity Unit, established to address BSA and AML violations in financial institutions, led the investigation, which forms part of the Organized Crime Drug Enforcement Task Forces (OCDETF) initiative to disrupt high-level criminal organizations in the US.

“We have taken full responsibility for the failures of our U.S. [anti-money laundering] program and are making the investments, changes and enhancements required to deliver on our commitments,” said Bharat Masrani, group president and chief executive of TD Bank Group. “This is a difficult chapter in our Bank’s history. These failures took place on my watch as CEO and I apologize to all our stakeholders.”