TD Bank accepts ceiling on US growth and $3 billion in fines after failing to monitor money laundering

It looks like a Canadian adaptation of ‘Breaking Bad’.

TD Bank, the U.S. subsidiary of financial giant Toronto-Dominion Bank, pleaded guilty Thursday to conspiracy to launder money for criminal groups, including global drug cartels. The fines will have a dramatic impact on one of the most aggressive players in US retail banking.

You had one job

The Justice Department did not mince its words. “TD Bank created an environment for financial crime to flourish by tailoring its services to criminals,” Attorney General Merrick Garland said at a news conference Thursday.

The evidence spoke for itself. TD Bank allowed three money laundering networks to send more than $670 million through accounts from 2019 through 2023, according to the Office of the Comptroller of the Currency (OCC), creating opportunities for “terrorist financing or other illegal financial transactions.” In a breathtaking example, prosecutors said a Chinese fentanyl money laundering group paid TD Bank employees $57,000 in gift cards to ensure they would “continue to process their transactions” and not report them in regulatory filings. “While TD Bank nominally had a compliance program in place from January 2018 to April 2024, it failed to monitor approximately 92% of its total transactions, representing approximately $18.3 trillion in transaction activity,” said Philip Sellinger, U.S. Attorney for New Jersey, who joined Garland at the news conference. The punishment was brutal:

• As part of the settlement, TD Bank – which has made an aggressive expansion into America that has made it the country’s tenth largest bank – will see its growth ambitions halted. TD Bank will be subject to an OCC-imposed cap on its retail operations that will prevent it from growing beyond its current U.S. asset level.
• TD Bank is transferring $1.8 billion in fines to the DoJ, $1.3 billion to the Treasury Department’s Financial Crimes Enforcement Network, and $450 million to the OCC.

Sorry, it’s not enough: “These failures occurred under my watch as CEO and I apologize to all our stakeholders,” Bharat Masrani, CEO of TD Bank Group, said in a statement, noting the “difficult chapter in our bank’s history.” Things could get even darker: Wells Fargo — which is operating under an asset ceiling like TD Bank will have to do after a fake accounts scandal — has had to lay off thousands of people because growth has been essentially limited.