TD Bank pleads guilty and pays $3 billion to settle money laundering case – DNyuz

TD Bank agreed to pay about $3 billion in fines to U.S. authorities and pleaded guilty Thursday to money laundering in a case brought by federal prosecutors, who said the Canadian bank made it “easy for criminals” ‘ to open accounts and transfer money for almost a decade.

In settling the case, federal bank regulators also imposed a cap on TD’s ability to attract new deposits in the United States, a rare move that will limit the lender’s ability to continue its business in a major market to grow.

The combined penalties are the largest ever imposed on a bank by US authorities for violating anti-money laundering laws, surpassing the $1.92 billion paid by British bank HSBC in 2012 for transferring billions to Mexican drug cartels and sanctioned countries like Iran.

The Office of the Comptroller of the Coin has hit TD Bank with what is considered the industry’s most drastic penalty: an “asset cap” that prevents the bank from growing beyond its current size. TD Bank, with about $370 billion in assets, is the first major bank to face an asset cap since Wells Fargo, which has been restricted since 2018 for a litany of misdeeds, including opening sham bank accounts for its customers without their permission.

The bank pleaded guilty to conspiracy to fail to maintain an adequate anti-money laundering program and to fail to file accurate transaction reports. Cynthia Adams, Chief Legal Officer of TD Bank in the United States, entered a guilty plea on behalf of the bank’s US subsidiary in the Federal District Court in Newark, before US Judge Esther Salas.

Federal prosecutors said in documents filed in court that some of the bank’s employees facilitated money laundering by criminal gangs, which the bank was slow to detect and address. Prosecutors said they had also charged more than 20 people, including two bank insiders.

“TD Bank’s continued prioritization of growth over controls allowed its employees to break the law and facilitate the laundering of hundreds of millions of dollars,” Michael J. Hsu, the currency’s acting comptroller, said in a statement. “Imposing an asset ceiling will ensure that the bank focuses on building good controls that match its risk profile.”

The joint action involved federal prosecutors in New Jersey and Washington, the Federal Reserve, the Office of the Comptroller of the Monetary Affairs and other Treasury Department authorities.

TD Bank Group – Canada’s second-largest bank, with approximately 1,100 branches in the United States – announced last year that it was the subject of a US Department of Justice investigation into its anti-money laundering compliance. money. In April, the bank said it was also in discussions with three U.S. banking regulators about fines for failing to comply with anti-money laundering laws.

At the time, the bank set aside $450 million for the fines it expected, but warned investors that the final costs could be higher. In August, the bank set aside another $2.6 billion in reserve for expected fines. To raise that money, TD Bank sold 40.5 million shares of Charles Schwab stock, reducing its ownership stake in the banking and brokerage firm to just over 10 percent, down from 12 percent.

“The failures were serious,” Bharat Masrani, CEO of TD Bank since 2014, told analysts in August. “We own it. We know what the problems are and we are solving them.”

The bank announced last month that Mr Bharat would retire in April and appointed his successor, Raymond Chun, currently head of the lender’s personal banking division.

Last year, TD Bank agreed to pay $1.2 billion to settle claims stemming from a $7 billion Ponzi scheme involving Stanford Financial, a bank that failed in 2009. TD was accused of continuing to do business with Stanford despite clear red flags about its activities and the fraudulent certificates of deposit Stanford sold to more than 20,000 customers.

The swirling investigations scuttled TD Bank’s planned acquisition of Memphis-based First Horizon bank, a $13.4 billion takeover that was announced in early 2022 but halted last year due to difficulties in obtaining approval from the regulatory authorities. TD Bank paid First Horizon a $200 million breakup fee for not completing the deal.

TD Bank has spent 500 million Canadian dollars (about $365 million) on improvements to anti-money laundering controls, Masrani said in May. Late last year, the bank hired Herb Mazariegos, formerly of the Bank of Montreal, to run its global anti-money laundering program.

TD Bank’s U.S. branches stretch along the east coast from Maine to Florida. It has almost as many branches across Canada, where the bank is also known as Toronto-Dominion. It is the tenth largest bank in the United States, according to Federal Reserve data.

In the settlement, TD agreed to appoint an independent monitor to oversee the anti-money laundering program.

The post TD Bank Pleads Guilty, Pays $3 Billion to Settle Money Laundering Case first appeared in the New York Times.