TD Bank fined $3 billion in historic money laundering settlement

TD Bank, one of Canada's biggest lenders, has agreed to pay more than $3bn (£2.3bn) and pleaded guilty to criminal charges in the US Allows drug cartels and other criminals to transfer millions of dollars in illegal funds.

Prosecutors said the bank operated for nearly a decade with inadequate safeguards against money laundering, even failing to act when staff identified obvious cases of abuse by staff, such as one customer depositing $1 million in cash daily.

The lender now faces restrictions on its growth in the US – as well as the largest fine under anti-money laundering laws.

TD Bank's chief executive said the bank was taking “full responsibility” for its failure.

Bharat Masrani said the bank has the financial strength to weather the situation and will make the “necessary investments, changes and enhancements to meet our commitments”.

The bank said it would be a multi-year process, but it has already taken steps to overhaul its anti-money laundering program, adding more than 700 new staff specializing in the issue.

“This is a difficult chapter in the history of our bank. These failures happened on my watch as CEO and I apologize to all our stakeholders,” he said on Thursday.

Mr Masrani announced last month that he would retire in April 2025 after a decade at the helm of the bank.

TD Bank is the largest lender in U.S. history to plead guilty to failings under the Bank Secrecy Act and the first to plead guilty to conspiracy to commit money laundering, the U.S. Department of Justice said.

The growth restrictions that U.S. retail businesses have under contracts with regulators are unusual — reserved for serious cases of wrongdoing, such as the bogus account fraud uncovered at Wells Fargo several years ago.

Attorney General Merrick Garland said the bank was cooperating with the investigation and that further private prosecutions were expected

“By facilitating its services for criminals, TD Bank has become one,” he said.

At a news conference announcing the charges, US officials said the bank – the 10th largest in the US – had “starved” its compliance programs of investment, even as it grew.

By 2018, it failed to monitor more than 90% of transactions on its network, more than $18tn worth of activity, prosecutors said at a news conference.

The compliance gaps were so well-known internally that employees joked that the bank's policies — “America's most convenient bank” — were marketed toward criminals, they said.

Officials said a customer used TD Bank to launder more than $470 million in drug money, make large cash deposits and bribe employees with gift cards.

The scheme allows fentanyl to be diverted from users to drug networks in Mexico and China, officials said.

Officials said another scheme involved the participation of five bank employees, who helped issue dozens of ATM cards, facilitating the transfer of $39 million in illicit funds to Colombia.

TD is the sixth largest bank in North America by assets and serves more than 27.5 million customers worldwide.

The settlement announced Thursday will include a period of outside observation.

The penalties include $1.8 billion to the Justice Department and $1.3 billion to the Treasury's Financial Crimes Enforcement Network, as well as payments to other regulators, including the Office of the Comptroller of the Currency and the Federal Reserve.

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