TD Fined US$3.09 Billion, Pleads Guilty to US Money Laundering Charges – BNN Bloomberg

U.S. Attorney General Merrick Garland said at a news conference Thursday afternoon that TD became the largest bank in U.S. history to plead guilty to the failures of the Bank Secrecy program Act and the first to admit to conspiracy to commit money laundering.

The total fine includes a $1.8 billion settlement with the U.S. Department of Justice and the U.S. Attorney’s Office for the District of New Jersey regarding their investigation. The US Financial Crimes Network fined TD US$1.3 billion.

The bank also received a cease-and-desist order, a US$450 million penalty and non-financial sanctions from the Office of the Comptroller of the Currency which limited its growth in the United States after finding that the Monitoring of TD’s transactions had “significant consequences”, systemic breakdowns.

Garland said TD created an environment “that allowed financial crime to flourish.”

“There is nothing wrong with a bank trying to make its services convenient for its honest customers, but there is something terribly wrong with a bank knowingly making its services convenient for criminals,” he told reporters at the press conference.

“TD Bank chose profits over compliance to keep costs low. The move is now costing the bank billions of dollars in criminal and civil penalties.

TD said the fines would largely be covered by previous provisions it had set aside totaling $3.05 billion. It also agreed to remediate its anti-money laundering program and be subject to formal oversight of that process.

The total assets of TD’s two US banking subsidiaries cannot exceed US$434 billion under the sanctions. This restriction does not apply to TD Securities or any of the bank’s Canadian or global operations.

TD will be subject to stricter approval processes in the United States for new banking products, services, marketplaces and stores.

Bharat Masrani, CEO of TD, called this period “a difficult chapter in our bank’s history.”

“It’s up to us to do it. We own it. We should have done better,” Masrani told analysts in a conference call Thursday.

“We know what the problems are. We’re fixing them as we go along. We are making sure this doesn’t happen again. This is a sad day in our history, but we know what we must do moving forward.

Last month, Masrani said the shortcomings were his responsibility as the bank announced Raymond Chun would replace him when he retires next year.

The investigations posed a major hurdle for the bank and helped derail its proposed $13.4 billion acquisition of U.S. bank First Horizon Corp. last year.

Garland said the bank admitted in its plea agreement that it allowed three money laundering rings to move more than US$670 million through TD Bank accounts over a six-year period.

At least one of these schemes involved five TD Bank employees who conspired with criminal organizations to open and maintain accounts at the bank that were used to launder US$39 million into Colombia, including cash from drugs, Garland said.

“On several occasions, senior executives, including the person who became head of the bank’s anti-money laundering program, knew there were serious problems with the anti-money laundering program of the bank, but the bank failed to correct them,” he said.

In total, the U.S. Department of Justice has prosecuted two dozen people for their involvement in these money laundering schemes, Garland said. He said the Justice Department has indicted two TD employees for their involvement in one of these schemes.

As a result of the settlement, TD said 2025 would be a “transition year” with near-term costs that would require a restructuring of the bank’s balance sheet. As part of the plan, it said it would reduce U.S. assets by about 10% in 2025 and maintain high liquidity levels.

In a statement, Canada’s banking regulator thanked U.S. authorities for their “sustained and continued engagement in this matter.”

“Weaknesses in an institution’s anti-money laundering regime constitute a prudential risk,” said Peter Routledge, Superintendent of Financial Institutions.

“In cases where such deficiencies arise, OSFI expects and may require that the board of directors and management of an institution take necessary corrective action without delay, with particular emphasis on corporate governance. business, compliance and financial and operational resilience. »

This report by The Canadian Press was first published October 10, 2024.