TD Bank has agreed to pay a $3 billion fine to settle charges that it failed to properly monitor money laundering by drug cartels. This includes a $1.3 billion penalty to the US Treasury Department’s Financial Crimes Enforcement Network, a record fine for a bank, as well as $1.8 billion to the US Justice Department. The Department of Justice stated that TD Bank had long-term and systemic deficiencies in monitoring transactions, allowing money laundering to occur. The bank will also plead guilty to violations of the Bank Secrecy Act as part of the settlement.
The US government’s investigation found that more than 90% of transactions went unmonitored between January 2018 to April 2024, enabling money laundering networks to transfer over $670 million through TD Bank accounts. This resulted in actual harm to American citizens and communities, according to Deputy Treasury Secretary Wally Adeyemo. TD Bank employees were found to have collected gift cards to process cash deposits from money laundering networks to ensure their transactions were not reported. The Office of the Comptroller of the Currency also noted that TD processed hundreds of millions of dollars of suspicious transactions.
In response to the settlement, TD Bank CEO Bharat Masrani acknowledged the failures of the bank’s anti-money laundering program and apologized to stakeholders. The bank is ramping up its efforts to prevent money laundering, including hiring over 700 specialists and implementing new processes. The bank will be monitored by FinCEN for four years to ensure compliance with the agreement. The US Federal Reserve has also fined TD Bank and required the company to relocate its compliance office to the United States.
As a result of the settlement, TD Bank’s US-listed shares dropped 6% as investors anticipate higher legal expenses and weaker growth. The bank expects a one-time charge of $1.5 billion after taxes and plans to reduce 10% of its assets to address the fine. Analysts believe that TD Bank will need to find new avenues for growth beyond its traditional US retail banking. Officials at the Justice and Treasury departments have expressed concern over Mexican cartels using the US banking system to launder drug proceeds, leading to increased scrutiny on financial institutions.
Critics, including Senator Elizabeth Warren, believe that the penalties imposed on TD Bank do not go far enough. Warren stated that big banks treat government fines as the cost of doing business and called for better enforcement of anti-money laundering laws. Last year, TD Bank paid $1.2 billion to settle a lawsuit related to an infamous Ponzi scheme but denied any wrongdoing. The story is still developing as officials continue to address concerns over money laundering by drug cartels.
