TD Bank became the largest bank in U.S. history to plead guilty to violating federal anti-money laundering laws, agreeing to pay a $3 billion penalty to resolve the charges, government officials announced Thursday. did.
TD’s plea agreement includes the imposition of asset limits and other restrictions on the business, authorities said. The bank pleaded guilty to conspiracy to commit money laundering and failing to file accurate reports or maintain a compliant anti-money laundering program, according to the Department of Justice.
TD failed to monitor more than $18 trillion in customer activity for nearly a decade, allowing three money laundering networks to transfer illicit funds through the bank’s accounts, U.S. authorities say, and the problem remains unsolved. He said it was widespread.
Attorney General Merrick Garland told reporters at a news conference about the plea deal that bank employees “publicly joked” about the lack of compliance on numerous occasions.
“TD Bank chose profits over compliance to keep costs down,” Garland said. He said TD was the largest bank to admit to violating the US Bank Secrecy Act.
In some cases, TDs did not flag suspicious activity until law enforcement brought it to their attention, authorities said.
Asset limits imposed by the Office of the Comptroller of the Currency are rare measures, usually put in place for serious cases.
This is a major blow to TD, which has been aiming for further expansion in the United States, which accounts for about one-third of the bank’s revenue.
The agreement prevents TD Bank from opening new branches or entering new markets without OCC approval, regulators said.
The combined $3 billion fine will be paid to the Department of Justice, U.S. banking regulators and the Treasury Department’s Financial Crimes Enforcement Network.
The agreement resolves investigations by the Department of Justice, the Office of the Comptroller of the Currency and the Treasury Department’s Financial Crimes Enforcement Network.
This also includes obligations for independent monitoring.
Before details of the plea deal were announced, Cormark Securities analyst Lemar Persaud said the asset restrictions were a “worst-case scenario” for TD.
The bank has already racked up $3 billion in fines.
Persaud drew parallels with Wells Fargo, which imposed a $1.95 trillion asset cap and curbed profits in the wake of the fake account scandal.
Asset caps will also constrain TD’s profits, but not to the same degree as Wells Fargo, he said.
Persaud said he believes the TD investigation “will lead to a significant underperformance of the stock and lead to the departure of current CEO Bharat Masrani.”
TD is the second largest bank in Canada and the 10th largest bank in the United States.
The lender first disclosed it was fielding inquiries from regulators and law enforcement last year, just months after calling off its $13 billion acquisition of regional lender First Horizon.
After investigators uncovered criminal activity in China that bribed employees and brought large bags of cash into branches to launder millions of dollars in fentanyl sales through TD branches in New York and New Jersey, federal authorities told TD Officials confirmed that they have begun an investigation into the company’s internal controls.
TD has spent millions of dollars to strengthen its compliance program, laid off dozens of employees at its U.S. branches, appointed Lei Chung, head of Canadian retail banking, as its new chief executive officer. The new chief has been kept away from money laundering scandals.
CEO Masrani, who has been at the helm for nearly a decade and previously led the company’s U.S. operations, will step down next year.
Masrani said he takes full responsibility for the money laundering problems plaguing the bank.
