TD Bank to pay $3 billion in money-laundering settlement with Justice Department

WASHINGTON – TD Bank will pay nearly $3 billion in a historic settlement with U.S. authorities who said Thursday that the financial institution's lax practices allowed significant money laundering over several years.

Canada-based TD Bank has pleaded guilty to conspiracy to commit money laundering, the largest bank in US history to do so, Attorney General Merrick Garland said.

“TD Bank created an environment that allowed financial crimes to thrive,” Garland said. “It has become one by facilitating its services for criminals.”

High-level officials were warned of serious problems with the bank's anti-money laundering program, but failed to fix them because employees openly joked about how easy it seemed for criminals to launder money there, Garland said.

The bank is the 10th largest in the US, and its CEO said the company takes full responsibility and is cooperating with the investigation. TD Bank Group CEO Bharat Masrani said it is taking steps to fix U.S. anti-money laundering programs, including hiring new leadership and adding hundreds of new experts.

“We know what the problems are, we are fixing them. As we move forward, we are making sure this never happens again,” Masrani said. “And I'm 100% confident that we'll come out on the other side and come out stronger.”

The Justice Department said the bank allowed at least three different money laundering networks to move a total of $670 million through TD bank accounts over several years.

The institution has become the bank of choice for multiple criminals and money-laundering organizations, authorities said.

“From fentanyl and drug trafficking, to terrorist financing and human trafficking, TD Bank's chronic failures have provided fertile ground for many illicit activities to infiltrate our financial system,” said Treasury Undersecretary Wally Adeyemo.

In one case, a man transferred more than $470 million in drug proceeds and other illicit funds through TD Bank branches, bribing employees with more than $57,000 in gift cards.

He chose TD Bank because it had the “most permissive policy,” depositing more than $1 million in cash in one day multiple times and then moving the funds out of the bank by check or wire transfer, Garland said. This continued despite staff raising concerns about what he was doing.

One bank also had a stack of over-the-counter and ATM withdrawals that were 40 to 50 times the daily limit, said New Jersey U.S. Attorney Philip Selinger.

In a separate scheme, five employees worked with criminal organizations to open and maintain accounts that were used to smuggle $39 million into Colombia, including drug proceeds, Garland said.

There were also several red flags in that case, including the fact that the same Venezuelan passports were used to open multiple accounts, but the bank didn't identify the problem until an employee was arrested.

In a third scheme, a money laundering network had at least five shell company accounts that transferred more than $100 million in illicit funds, but the bank did not file a required suspicious activity report until law enforcement was alerted.

The bank's “long-term, widespread, and systemic deficiencies” allowed such abuses to flourish in its policies over a nine-year period, prosecutors said.

Two dozen people have been indicted for their involvement in the money laundering scheme, including two TD Bank employees, Garland said. Investigation is ongoing.

The bank agreed to a major overhaul of the corporate compliance program at its US operations, as well as three years of monitoring and five years of probation.