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TD Bank pleads guilty and pays $3 billion under AML law

TD Bank pleads guilty and pays billion under AML law

Canada-based financial institution TD Bank has announced its agreement to pay more than $3 billion and pleaded guilty to criminal charges related to money laundering in the United States.

As regulators explain, the fine stems from TD Bank’s failure to adequately monitor money laundering by drug cartels and other criminals, which allowed them to transfer hundreds of millions of dollars in illicit funds. In addition, the bank has not taken adequate anti-money laundering measures for almost ten years. When employees reported instances of abuse, including when a customer deposited $1 million in cash daily, the company did not respond efficiently.

In addition, TD Bank now faces restrictions in its development strategy in the United States, as the financial institution is subject to four years of monitoring by the Financial Crimes Enforcement Network (FinCEN). The regulator intends to closely monitor the lender and ensure that it complies with the agreement. In addition, the Federal Reserve fined TD Bank and will force the financial institution to relocate its anti-money laundering (AML) compliance office to the United States.

TD Bank’s fine includes a $1.3 billion penalty to be paid to the U.S. Treasury Department’s FinCEN. At the same time, the bank will transfer $1.8 billion to the U.S. Department of Justice and plead guilty to end the U.S. government’s investigation that it violated the Bank Secrecy Act and aided money laundering.

Transaction monitoring error

According to a legal filing, between January 2018 and April 2024, over 90% of transactions conducted through the financial institution went unmonitored, which in turn allowed three money laundering networks to collectively transfer over $670 million through TD bank accounts. Officials also highlighted that a customer used TD Bank to launder more than $470 million in drug proceeds, make significant cash deposits and bribe employees with gift cards.

During the same period, one program enabled the reflow of payments from drug users to networks in Mexico and China, while another scheme involved five bank employees who enabled the issuance of ATM cards and facilitated the illegal transfer of $39 million in funds to Colombia.

Scaling compliance and minimizing AML risk

Commenting on the announcement, TD Bank representatives mentioned that they take full responsibility for the failure of the financial institution’s US AML program and want to invest, change and expand all necessary procedures to meet its obligations. In addition, the bank guaranteed that it has sufficient liquidity to pay the fine and continue operations.

Additionally, regulators mentioned that the bank was cooperating with the investigation and further individual prosecutions could be expected. As part of the agreement, TD Bank intends to expand its AML supervision and plans to hire over 700 new specialists with experience and qualifications in the areas of money laundering prevention, financial crime and AML remediation, as well as deploy new processes to optimize the detection of financial crime risk.