TD Bank has pleaded guilty and will pay over one billion dollars to end a Justice Department investigation into violations of the Bank Secrecy Act (BSA) and money laundering. TD Bank has agreed to forfeit $452,432,302.00 and pay a criminal fine of $1,434,513,478.40, for a total financial penalty of $1,886,945,780.40.
The IRS Criminal Investigation Department, the Federal Deposit Insurance Corporation Office of Inspector General, and the Drug Enforcement Administration investigated the case. They found three major money laundering networks managed to transfer over $670 million through TD Bank accounts between 2019 and 2023.
The Board of Governors of the Federal Reserve Board (FRB), the Treasury Department’s Office of the Comptroller of the Currency (OCC) and Financial Crimes Enforcement Network (FinCEN) reached the guilty plea deal and penalty as part of a concentrated resolution.
TD Bank pleads guilty to receive $1.8 billion in penalties
According to court evidence, TD Bank’s AML program had systematic flaws. These were taken into account in the settlement and spanned the period between January 2014 and October 2023.
At this time, the vulnerabilities in the TD Bank AML policies, procedures, and controls went unchecked, and no action was taken to amend them. It is alleged that “senior executives at TD Bank enforced a budget mandate, referred to internally as a “flat cost paradigm,” requiring that TD Bank’s budget not increase year-over-year, despite its profits and risk profile increasing significantly over the same period. Although TD Bank maintained elements of an AML program that appeared adequate on paper, fundamental, widespread flaws in its AML program made TD Bank an “easy target” for perpetrators of financial crime.”
These perpetrators did precisely that by targeting these systematic flaws in the TD transaction monitoring program, resulting in millions of dollars being laundered unchecked through the banking giant.
TD instead focused on a “flat cost paradigm” and the “customer experience” over the holes in its system that financial predators and threat actors could take advantage of.
“For nearly a decade, TD Bank failed to update its anti-money laundering compliance program to address known risks. 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,” said Principal Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division.
TD Bank did not monitor domestic automated clearinghouse (ACH) transactions during this decade. This resulted in “92% of total transaction volume going unmonitored from Jan. 1, 2018, to April 12, 2024. This amounted to approximately $18.3 trillion of transaction activity,” according to the report.
The Justice Department agreed to the resolution based on several factors, including the offenses’ nature, seriousness, and pervasiveness. It also considered how TD Bank became the number one bank of choice for multiple money laundering organizations and criminal entities. TD Bank also received a 20% reduction in the overall penalty for cooperating with federal agents and entities in the investigation.
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