TD Bank to pay $3 billion penalty after money laundering probe

TD Bank N.A. pleaded guilty and agreed to pay $3 billion in penalties to resolve the Justice Department's investigation into violations of the Bank Secrecy Act that requires banks to report and monitoring money laundering.

A release from the U.S. Justice Department carried references to TD describing itself as "America's Most Convenient Bank," pointing to practices that made money laundering convenient for criminals.

TD's US CEO issued a letter taking responsibility for the failure to monitor criminal activity, but also noted that the bank is well capitalized and capable of serving its customers.

TD has branch offices and a credit card operation in Delaware. The bank retained the extended branch office hours and "convenient" slogan of Commerce Bank, which it acquired in 2008.

The US operation the Canadian bank pleaded guilty to conspiring to fail to maintain an anti-money laundering program (AML) that complies with the secrecy act.

TD Bank's guilty pleas are part of a settlement with the Board of Governors of the Federal Reserve Board as well as the US Treasury Department's Office of the Comptroller of the Currency and Financial Crimes Enforcement Network.

The settlement also sets restrictions on growth of TD similar to those placed on Wells Fargo, which settled with regulators over allegations that included accounts being opened without the knowledge of customers.

"By making its services convenient for criminals, TD Bank became one," said Attorney General Merrick B. Garland. "Today, TD Bank also became the largest bank in U.S. history to plead guilty to Bank Secrecy Act program failures, and the first US 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. Let me be clear: our investigation continues, and no individual involved in TD Bank's illegal conduct is off limits."

"TD Bank prioritized growth and convenience over following its legal obligations," said U.S. Attorney Philip R. Sellinger for the District of New Jersey. "As a result of staggering and pervasive failures in oversight, it willfully failed to monitor trillions of dollars of transactions – including those involving ACH transactions, checks, high-risk countries, and peer-to-peer transactions – which allowed hundreds of millions of dollars from money laundering networks to flow through the bank, including for international drug traffickers."

Over the last decade, TD Bank's federal regulators and TD Bank's own internal audit group identified concerns about its transaction monitoring program, a key element of an appropriate anti-money laundering program necessary to properly detect and report suspicious activities, a release noted.

According to prosecutors, TD Bank failed to appropriately fund and staff its AML program, opting to postpone and cancel necessary projects putting a priority on a "flat cost paradigm" and the "customer experience." The flat cost referred to a lack of budget increases in areas such as money laundering compliance.

According to the Justice Department release, the failures enabled three money laundering networks to collectively transfer more than $670 million through TD Bank accounts between 2019 and 2023. 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.

TD Bank has also agreed to retain an independent compliance monitor for three years.