TD Bank to pay more than $3 bn to US in money-laundering case

Canada's TD Bank has agreed to pay more than $3 billion in penalties for failing to adequately monitor money laundering by drug cartels, US officials said Thursday.

TD Bank, the 10th largest bank in the United States, has pleaded guilty to multiple felonies including violating the Bank Secrecy Act and conspiracy to commit money laundering, Attorney General Merrick Garland said.

"TD Bank created an environment that allowed financial crime to flourish by making its services convenient for criminals," Garland said at a press conference.

"Our anti-money laundering laws dictate that a bank that willfully fails to protect against criminal schemes is also a criminal," Garland said. "That is what TD Bank was."

The attorney general said TD Bank is the first bank in US history to plead guilty to conspiracy to commit money laundering.

Two TD Bank employees have been charged for involvement in money laundering schemes and investigations into other employees are underway, Garland said, adding that "no individual involved in TD Bank's illegal conduct is off limits."

Between January 2014 and October 2023, TD Bank failed to monitor $18.3 trillion in customer activity, allowing three money laundering networks to transfer over $670 million through TD Bank accounts, US officials said.

Under the settlement, TD Bank will pay $1.8 billion to the Justice Department and another $1.3 billion assessed by the US Treasury Department's Financial Crimes Enforcement Network (FinCEN).

The US Office of the Comptroller of the Currency also imposed what is known as an asset cap on the bank, restricting its growth in the United States beyond its current level of assets.

TD Bank has around 1,100 branches in the United States and 10 million clients. It is Canada's second-largest bank after the Royal Bank of Canada.

"From fentanyl and narcotics trafficking, to terrorist financing and human trafficking, TD Bank's chronic failures provided fertile ground for a host of illicit activity to penetrate our financial system," Deputy Treasury Secretary Wally Adeyemo said.

- 'It 100 percent is' -

The Treasury Department said suspicious activity that was not properly monitored or reported by TD Bank included more than $470 million in transactions involving Da Ying Sze, a New York man who pleaded guilty in 2022 to laundering proceeds from narcotics trafficking.

Garland said TD Bank employees were bribed by Sze with more than $57,000 in gift cards and he made deposits of more than $1 million in cash on several occasions.

The attorney general recounted a conversation between two TD Bank employees after Sze purchased more than $1 million in official bank checks with cash in a single day.

"How is that not money laundering?" one employee asked another.

"Oh, it 100 percent is," the other employee replied.

TD Bank president and CEO Bharat Masrani issued an apology and said it has been a "difficult chapter in our bank's history."

"We have taken full responsibility for the failures of our US (anti-money laundering) program and are making the investments, changes and enhancements required to deliver on our commitments," Masrani said in a statement.

"These failures took place on my watch as CEO and I apologize to all our stakeholders," said Masrani, who announced in September that he would step down next year.

TD Bank shares were trading down 5.30 percent on the New York Stock Exchange on Thursday afternoon.

cl/dw