TD Bank pleads guilty to US charges, faces trading restrictions | Money Laundering News

Two units of TD Bank have pleaded guilty to criminal charges in the United States and agreed to pay a combined $3 billion in fines to resolve federal money laundering investigations, U.S. authorities said. making it the largest bank in US history guilty of such violations.

The plea agreement includes the imposition of an asset cap and other limitations on his activities, authorities announced Thursday. It follows several government investigations into what authorities have described as pervasive problems at TD Bank. For years, the government said, TD ignored warning signs from high-risk customers and created an environment ripe for exploitation by bad actors.

The bank pleaded guilty to conspiracy to commit money laundering and conspiracy to fail to file accurate reports or maintain a compliant anti-money laundering program, the U.S. Department of Justice said.

TD Bank chose profits over compliance to keep costs low, Attorney General Merrick Garland said at a news conference. He said TD was the largest bank to admit to violating the U.S. Bank Secrecy Act.

The cap on the expansion of its assets in the United States, imposed by the Office of the Comptroller of the Currency, is a rare measure generally reserved for serious cases. That would deal a blow to TDs' hopes of expanding further in the United States, which accounts for about a third of the banks' revenue.

Shares of TD Bank fell nearly 5 percent Thursday afternoon.

This is a difficult chapter in the history of our bank. These failures took place under my watch as CEO and I apologize to all our stakeholders, CEO Bharat Masrani said in a statement.

TD also agreed to pay $3 billion in combined penalties to U.S. banking regulators, the Justice Department and the Treasury Department's Financial Crimes Enforcement Network.

The agreement ended investigations by the Justice Department, the Office of the Comptroller of the Currency and the Treasury's Financial Crimes Enforcement Network. This also included imposing independent oversight.

Most convenient bank

TD failed to monitor more than $18 trillion in customer activity for about a decade, allowing three money laundering rings to move illicit funds through accounts at the bank, authorities said Americans, describing the problems as pervasive.

Bank employees openly joked several times about the lack of compliance, Garland told reporters during a briefing on the plea deal.

TD Bank's problems were known at all levels of the bank, authorities said. In some cases, TD did not report suspicious activity until law enforcement paid attention, and sometimes cashiers accepted gift cards as bribes.

So it's no wonder that the slogan America's Most Convenient Bank was used as a joke by employees to describe TD Bank as convenient for criminals, said New Jersey U.S. Attorney Philip Sellinger.

Worst case

An asset cap is the worst-case scenario for TD, Lemar Persaud, an analyst at Cormark Securities, said before details of the plea deal were announced. The bank had already set aside $3 billion for the fine.

Persaud drew a parallel with Wells Fargo, which implemented a $1.95 trillion asset cap following a fake accounts scandal, which limited its profits. An asset cap would also limit TD's profits, but to a lesser extent than for Wells Fargo, he said.

TD's investigation led to significant underperformance of the stock and, in our view, the retirement of current CEO Bharat Masrani, Persaud said.

TD is the second largest bank in Canada and the tenth largest in the United States. The lender first revealed it was responding to requests from regulators and law enforcement last year, just months after terminating its $13 billion acquisition of regional lender First Horizon.

Federal authorities began investigating TD's internal controls after agents uncovered a Chinese criminal operation that bribed employees and brought large bags of cash into branches to launder millions of dollars in fentanyl sales into TD branches in New York and New Jersey, a source confirmed.

TD spent millions to strengthen its compliance programs, laid off dozens of employees at its U.S. branches and named Ray Chun, head of personal banking in Canada, as CEO, distancing its new boss from the scandal money laundering.

CEO Masrani, who has been at the helm of the company for nearly a decade and previously led its U.S. operations, will retire next year. Masrani said he took full responsibility for the money laundering problems plaguing the bank.

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