Anti-money laundering
United States v. TD Bank
Date: Oct. 10, 2024
Issue: TD Bank’s consent orders with the U.S. Department of Justice (DOJ), Financial Crimes Enforcement Network (FinCEN), Office of the Comptroller of the Currency (OCC), and Federal Reserve to resolve alleged anti-money laundering (AML) violations.
Case Summary: TD Bank agreed to pay $3.1 billion to resolve DOJ, FinCEN, OCC and Federal Reserve allegations claiming it failed to implement adequate controls to detect and prevent money laundering.
According to DOJ, from January 2014 to October 2023, TD Bank failed to maintain an AML program which complied with the Bank Secrecy Act (BSA). DOJ also alleged the bank’s senior executives repeatedly enforced a budget mandate, referred to internally as a “flat cost paradigm,” that set expectations that all budgets including the AML budget. DOJ claimed TD Bank prioritized its flat cost paradigm across operations and its “customer experience” over AML procedures. As a result, TD Bank allegedly failed to remediate persistent and known deficiencies in its AML program. These alleged missteps include failing to substantively update its transaction monitoring system despite rapid growth between 2014 and 2022 and failing to adequately train its employees who served as a first line of defense against money laundering.
Allegedly, TD Bank’s AML failures enabled three money laundering networks to launder over $600 million in criminal proceedings through the bank between 2019 and 2023. According to DOJ, these failures created vulnerabilities that allowed five TD Bank store employees to open and maintain accounts for one of the money laundering networks. The five TD Bank employees conspired with criminal organizations to open and maintain accounts at the bank to launder $39 million to Colombia. DOJ also alleged TD Bank knowingly failed to file accurate currency transaction reports. Similarly, FinCEN alleged TD Bank willfully failed to establish an adequate AML program. According to FinCEN, the bank did not invest sufficient time, money, or managerial resources to adequately maintain its AML program. FinCEN claimed the failures of TD Bank’s AML program caused actual and material harm to the U.S. financial system.
Under the agreements, TD Bank will pay DOJ a criminal penalty of $1.43 billion and a forfeiture of $452.4 million. The bank will also pay a civil penalty of $1.3 billion. In addition, the bank agreed to pay the OCC and Federal Reserve civil penalties of $450 million and $123.5 million, respectively, which will be credited against the DOJ and FinCEN amounts. In addition, TD Bank agreed to a five-year term of probation and a three-year independent monitorship with DOJ, while its agreement with FinCEN includes a four-year monitorship requirement.
Bottom Line: TD Bank admits only to the facts in the plea agreement between TD Bank and DOJ. The Bank neither admits nor denies the remainder of the allegations.
Documents: DOJ Overview, FinCEN Consent Order, OCC Consent Order, Federal Reserve Consent Order
