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TD Bank agrees to pay USD 3 billion in money laundering settlement

Monday 14 October 2024 09:13 CET | News

Canada-based financial institution TD Bank has announced its agreement to pay over USD 3 billion, pleading guilty to criminal charges related to money laundering in the US. 

As detailed by regulators, the fine follows TD Bank’s failure to appropriately monitor money laundering by drug cartels and other criminals, allowing them to transfer hundreds of millions of dollars in unlawful funds. In addition, the bank did not enforce sufficient defences against money laundering for nearly 10 years. It did not efficiently act when staff members flagged cases of abuse, including a customer making daily deposits of USD 1 million in cash.

TD Bank agrees to pay USD 3 billion in money laundering settlement

Moreover, TD Bank is now facing restrictions in its development strategy in the US, with the financial institution being 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 is following the agreement. Also, the US Federal Reserve fined TD Bank and is set to force the financial institution to relocate its Anti-Money Laundering (AML) compliance office to the US.

TD Bank’s fine comprises a USD 1.3 billion penalty that is set to be paid to the US Treasury Department’s FinCEN. At the same time, the bank will direct USD 1.8 billion to the US Justice Department, pleading guilty to resolve the US Government’s investigation that it violated the Bank Secrecy Act and supported money laundering.

 

Transaction monitoring failings

According to a legal filing, over 90% of transactions conducted through the financial institution went unmonitored between January 2018 and April 2024, which in turn allowed three money laundering networks to collectively transfer over USD 670 million via TD Bank accounts. Also, officials underlined that one customer used TD Bank to launder over USD 470 million in drug proceeds, making substantial cash deposits and bribing staff with gift cards.

During the same period, a scheme enabled payments from drug users to flow back to networks in Mexico and China, while another one involved the participation of five bank staff, who allowed the issuing of ATM cards and facilitated the transfer of USD 39 million in illicit funds to Colombia.

Scaling compliance and minimising AML risk

When commenting on the announcement, representatives from TD Bank mentioned that they take full responsibility for the failures of the financial institution’s US AML program, aiming to invest, change, and augment all necessary procedures to deliver on its commitments. Additionally, the bank guaranteed that it holds sufficient liquidity to pay the fine and proceed with its operations.

Furthermore, regulators mentioned that the bank cooperated with the investigation and further individual prosecutions were expected. As part of the agreement, TD Bank intends to scale its AML surveillance, planning to hire over 700 new specialists with experience and qualifications in money laundering prevention, financial crimes, and AML remediation, and to deploy new processes to optimise the detection of financial crime risk.

Source: Link


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Keywords: AML, regulation, money laundering, transaction laundering, transaction monitoring
Categories: Banking & Fintech
Companies: TD Bank
Countries: United States
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Banking & Fintech

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TD Bank

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