TD Bank Pleads Guilty to Money Laundering Conspiracy and Will Pay More than $3 Billion in Fines for Violations of Bank Secrecy Act
TD Bank pled guilty and will pay more than $3.09 billion to resolve an investigation into violations of U.S. banking law and money laundering.
TD Bank N.A. is the 10th largest bank in the United States. It and its parent company, TD Bank US Holding Company, pled guilty to conspiring to fail to maintain an anti-money laundering (AML) program that complies with the Bank Secrecy Act (BSA), failure to file accurate Currency Transaction Reports (CTRs), and laundering money. The parent company also pled guilty to causing TD Bank N.A. to fail to mention an AML program that complies with the BSA and to fail to file accurate CTRs. It will pay $1.8 billion in criminal penalties to resolve the investigation.
“By making its services convenient for criminals, TD Bank became one,” said U.S. Attorney General Merrick B. Garland in a press conference on 10 October. “Today, TD Bank also became the largest bank in U.S. history to plead guilty to Bank Secrecy Act program failures, and the first U.S. bank in history to plead guilty to conspiracy to commit money laundering.
“TD Bank chose profits over compliance with the law—a decision that is now costing the bank billions of dollars in penalties,” Garland continued. “Let me be clear: our investigation continues, and no individual involved in TD Bank’s illegal conduct is off limits.”
What Happened
The U.S. Department of Justice (DOJ) found that between January 2014 and October 2023, TD Bank had long-term, pervasive, and systemic deficiencies in its AML policies, procedures, and controls, and failed to remediate them.
Federal regulators and TD Bank’s internal audit group identified concerns about the bank’s transaction monitoring program (an element of AML programs). But the program remained “effectively static” and adjustments were not made to address known deficiencies that included emerging money laundering risks. The DOJ also assessed that the bank failed to appropriately fund and staff its AML program, even postponing and canceling AML projects to prioritize a “flat cost paradigm” and the “customer experience.”
Alongside these program issues, TD Bank also failed to automatically monitor all domestic automated clearinghouse transactions, most check activity, and other transactions. This resulted in 92 percent of all transactions—about $18.3 trillion—going unmonitored from 1 January 2018 until 12 April 2024.
“TD Bank also added no new transaction monitoring scenarios and made no material changes to existing transaction monitoring scenarios from at least 2014 through late 2022; implemented new products and services, like Zelle, without ensuring appropriate transaction monitoring coverage; failed to meaningfully monitor transactions involving high-risk countries; instructed stores to stop filing internal unusual transaction reports on certain suspicious customers; and permitted more than $5 billion in transactional activity to occur in accounts even after the bank decided to close them,” the DOJ said.
These failures made banking “convenient” for criminals, according to TD Bank employees interviewed by the DOJ.
“These failures enabled three money laundering networks to collectively transfer more than $670 million through TD Bank accounts between 2019 and 2023,” the DOJ found. “Between January 2018 and February 2021, one money laundering network processed more than $470 million through the bank through large cash deposits into nominee accounts. The operators of this scheme provided employees gift cards worth more than $57,000 to ensure employees would continue to process their transactions.”
TD Bank employees did not identify the conductor of these transactions—as required under the BSA.
In a separate scheme from March 2021 to March 2023, a high-risk jewelry business moved about $120 million through shell accounts before TD Bank ultimately reported the activity. In another scheme, money laundering networks deposited funds in the United States and then withdrew those funds via ATM in Colombia.
“Five TD Bank employees conspired with this network and issued dozens of ATM cards for the money launderers, ultimately conspiring in the laundering of approximately $39 million,” the DOJ said.
More than two dozen individuals have been charged for their roles in these schemes, including two bank insiders. TD Bank’s plea agreement requires it to cooperate with the ongoing investigation into these individuals.
“For nearly a decade, TD Bank failed to update its anti-money laundering compliance program to address known risks,” said Principal Assistant Attorney General Nicole M. Argentieri, head of the Justice Department's Criminal Division. “As bank employees acknowledged in internal communications, these failures made the bank an ‘easy target’ for the ‘bad guys.’ These failures also allowed corrupt bank employees to facilitate a criminal network’s laundering of tens of millions of dollars.”
Additional Penalties
Along with the criminal penalties, the U.S. Office of the Comptroller of the Currency (OCC)—the bureau of the U.S. Department of Treasury that charters, regulates, and supervises U.S. national banks and agencies of foreign banks—issued a cease-and-desist order against TD Bank N.A. and TD Bank USA, along with a civil penalty of $450 million.
“TD Bank’s persistent prioritization of growth over controls allowed its employees to break the law and facilitate the laundering of hundreds of millions of dollars. The bank’s blatant risk management failures attracted illicit actors and are egregious and unacceptable,” said Acting Comptroller of the Currency Michael J. Hsu in a statement. “The OCC’s coordinated and comprehensive action, including the imposition of an asset cap, will ensure that the bank focuses on building proper controls commensurate with its risk profile.”
The OCC’s actions create an asset cap for TD Bank, which limits its consolidated assets to those reported on 30 September 2024—$434 billion—and sets in motion a timeline for the bank to be in compliance or be forced to reduce its total consolidated assets by up to 7 percent. For every additional year that the bank is not in compliance, the OCC can require it to further reduce its total consolidated assets by 7 percent.
“The OCC found that the bank had significant, systemic breakdowns in its transaction monitoring program,” according to an OCC press release. “The bank processed hundreds of millions of dollars of transactions with clear indica of highly suspicious activity, creating a potential for significant money laundering, terrorist financing, or other illicit financial transactions. The bank repeatedly failed to take appropriate and timely corrective action to address the highly suspicious activity and failed to properly emphasize BSA/AML compliance.”
Additionally, TD Bank is prohibited from opening new branches or entering a new market without the OCC’s approval. The bank is also subject to OCC oversight for adding new products and services until it has improved its policies and procedures for evaluating BSA/AML risks and has adequate controls in place to mitigate those risks.
TD Bank must also hire an independent third party to conduct transaction lookback and report any previous unreported suspicious activity. It is also barred from rehiring any employees who participated in the misconduct discussed in the OCC order.
TD Bank’s Response
TD Bank Group acknowledged and took “full responsibility” for its U.S. AML program failures and said that significant effort is underway to remediate its program to meet its legal obligations, according to a statement released by the bank on Thursday.
“This is a difficult chapter in our bank’s history. These failures took place on my watch as CEO, and I apologize to all our stakeholders,” said Bharat Masrani, group president and CEO, TD Bank Group.
The bank is undergoing a multi-year effort to implement an effective and sustainable AML program, including appointing a new U.S. head of financial crime risk management and a BSA/AML officer. The bank also established a dedicated committee on its U.S. boards for AML/BSA oversight and has introduced new standards, processes, and training to prevent, detect, and measure financial crime risk.
“Money laundering is a serious global threat, and our U.S. operation did not maintain an adequate AML program to thwart criminal activity,” said Alan MacGibbon, chair of the board, TD Bank Group. “The board has and continues to take action to address these failures and hold those responsible accountable. We have appointed new leaders across our U.S. operations, overhauled our U.S. AML team, and prioritized investments to drive the required changes.”
TD Bank is paying the largest penalty every imposed under the BSA in part because of the nature, seriousness, and pervasiveness of the offenses. It was also penalized for failing to “timely escalate relevant AML concerns” to the DOJ during the investigation.
“For years, TD Bank starved its compliance program of the resources needed to obey the law. Today’s historic guilty plea, including the largest penalty ever imposed under the Bank Secrecy Act, offers an unmistakable lesson: crime doesn’t pay—and neither does flouting compliance,” said U.S. Deputy Attorney General Lisa Monaco. “Every bank compliance official in America should be reviewing today’s charges as a case study of what not to do. And every bank CEO and board member should be doing the same. Because if the business case for compliance wasn’t clear before—it should be now.”
The BSA was enacted in 1970 to fight money laundering in the United States. It imposes reporting and other requirements on financial institutions and businesses to detect and prevent money laundering. These requirements include keeping records of cash purchases, filing reports of cash transactions that exceed $10,000, and reporting suspicious activity that might signify money laundering, tax evasion, or other criminal activity.
Toronto-Dominion Bank, known as TD Bank Group, is the sixth largest bank in North America and serves more than 27.5 million customers. As of 31 July 2024, it had $1.97 trillion in assets.