Toronto-Dominion Bank, commonly known as TD Bank, is facing unprecedented fines and fines from U.S. authorities for allegedly failing to stop hundreds of millions of dollars in drug money laundering.
The bank agreed to pay more than $3 billion to various U.S. government agencies and limit its growth until officials certify that TD Bank has taken sufficient steps to resolve internal oversight issues. did. If TD Bank fails to meet the terms of the settlement, the U.S. could force the bank to shed assets.
Here are five things to know about the TD Bank money laundering scandal.
Money laundering network moved $670 million through TD accounts
According to the Department of Justice (DOJ), three money laundering networks took advantage of TD Bank's alleged bankruptcy and moved more than $670 million through TD accounts from 2019 to 2023.
Over the six-year period from January 2018 to April 2024, the bank failed to monitor $18.3 trillion in customer activity, or 92% of its total transaction volume.
“TD Bank created an environment in which financial crime flourished. By making its services convenient for criminals, it became one for criminals,” Attorney General Merrick Garland said at a press conference Thursday.
An 'easy target' for criminals
According to the government, one scheme moved more than $470 million in fraudulent funds through TD Bank between January 2018 and February 2021 and gifted more than $57,000 in gift cards to TD employees. I have doubts.
The person behind the scheme, known to TD employees as David, said: “We attempted to launder the money through a number of financial institutions, but we found that TD Bank had the most permissive policies and procedures and We chose to clean the majority of the water there,” Garland said. Said.
The attorney general called David's conduct “obvious, to say the least,” and said David deposited more than $1 million in cash multiple times a day and then promptly left the bank using cashier's checks and wire transfers. I pointed out that.
In another scheme, five TD employees helped launder $39 million into Colombia. A third money laundering network maintained at least five shell company accounts at TD Bank and used them to transfer approximately $120 million.
TD employees appeared to be aware of the bank's problems, with one employee describing the bank as an “easy target” for “bad guys” and another saying the bank was “convenient”. Ta.
“There's nothing wrong with banks that try to make services convenient for honest customers. But there's something terribly wrong with banks that intentionally make services convenient for criminals,” Garland said. he said.
TD Bank makes history it doesn't want
TD Bank's alleged money laundering violations have made history.
The bank becomes the largest bank in U.S. history to plead guilty to charges brought under the Bank Secrecy Act (BSA), which requires banks to maintain records to prevent and detect financial crimes. TD Bank will also pay the largest fine ever imposed for BSA violations and is the first bank to plead guilty to money laundering conspiracy.
“Our anti-money laundering laws state that any bank that intentionally fails to protect itself from criminal schemes is also a criminal, and that was TD Bank,” Garland said.
The crackdown on TD Bank is the most aggressive federal action taken against a major bank since the historic fine imposed on Wells Fargo in 2018. Wells Fargo has been fined $1 billion and forced to limit its total assets to $1.9 trillion following a series of sales. scandal.
TD Bank may be forced to downsize
Like Wells Fargo, TD Bank is subject to asset limits that prevent the bank from growing beyond its $434 billion asset level as of Sept. 30. But TD Bank also could be forced to downsize if it fails to achieve profitability. Changes specified by federal banking regulators.
If TD Bank is unable to accomplish these changes within the deadline set by the Office of the Comptroller of the Currency (OCC), its primary federal regulator, it will be forced to reduce its total assets by up to 7%. The OCC could seek additional tax breaks from TD Bank of up to 7% for each year it fails to comply with the new order.
“TD Bank has consistently prioritized growth over control, allowing employees to break the law and facilitate the laundering of hundreds of millions of dollars.The bank’s blatant risk management failures are illegal. It attracts perpetrators and is outrageous and unacceptable,” said Michael J. Hsu, Acting Comptroller of the Currency.
“The OCC's coordinated and comprehensive actions, including the imposition of asset limits, will ensure that the bank is focused on developing appropriate controls commensurate with its risk profile.”
Banking critics say more needs to be done
The settlement with TD Bank may be historic, but it did little to appease financial industry critics and policymakers who favor stricter banking rules.
Sen. Elizabeth Warren (D-Mass.), a longtime critic of big banks, said the $3 billion fine was just a “cost of doing business” for a company of TD Bank's size.
“This settlement absolves bank executives who allowed TD to be used as a criminal slush fund. @TheJusticeDept and @USOCC must do a better job of enforcing anti-money laundering laws. there is.”
Warren and other financial regulation hawks have long called on government agencies to break up big banks that violate the law.
Jeremy Kress, a former Federal Reserve lawyer and University of Michigan business law professor, praised the OCC's ability to potentially force TD Bank to shed assets, but said it should be forced.
“The OCC appears to have learned from the Fed's long-term Wells Fargo asset cap. TD's asset cap requires the OCC to require TD to *reduce* its assets by 7% for each year of violation. It states that it may be requested,” Kress wrote to X.
“My only quibble is that reductions should be forced and not left to the OCC's discretion.”
