TD Bank (TD, TD.TO) has reached an agreement to pay approximately USD 3.09 billion in penalties to U.S. authorities, having admitted to charges related to money laundering, following an investigation led by federal prosecutors.
The bank, in conjunction with certain subsidiaries based in the U.S., has concurred with directives issued by the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board, and the Financial Crimes Enforcement Network (FinCEN). Additionally, TD Bank has entered into plea agreements with the Department of Justice's Criminal Division, Money Laundering and Asset Recovery Section, and the United States Attorney's Office for the District of New Jersey.
As part of the resolution, TD Bank will pay more than $1.8 billion to settle the Department of Justice's inquiry into violations of the Bank Secrecy Act (BSA) and related money laundering statutes.
Moreover, TD Bank has agreed to appoint an independent compliance monitor for a term of three years to enhance and remediate its Anti-Money Laundering (AML) compliance program. Separate settlements have also been reached with the Federal Reserve Board, OCC, and FinCEN, with the Justice Department crediting $123.5 million of the forfeiture towards the Federal Reserve Board's settlement.
Court documents reveal that from January 2014 to October 2023, TD Bank had longstanding, pervasive, and systemic inadequacies in its U.S. AML policies, procedures, and control mechanisms, failing to address these issues adequately. Instead, the bank's senior management imposed a "flat cost paradigm," a budgetary mandate that restricted any year-over-year budget increases, despite concurrent growth in profits and risk exposure, often resulting in TD Bank being vulnerable to financial crime.
The Office of the Comptroller of the Currency issued a cease and desist order alongside a $450 million civil penalty against TD Bank, N.A., and TD Bank USA, N.A., citing their failure in AML and Bank Secrecy Act compliance.
