TD Bank shares fall after $3 billion anti-money laundering charges

Posted on by Vaseline

  • TD Bank shares fell 8% after the company pleaded guilty to money laundering charges and agreed to pay a $3 billion fine.
  • The charges related to a scheme by Chinese cartels to bribe TD employees at bank branches in New York and New Jersey.
  • The fine is the largest anti-money laundering fine ever imposed on a bank by U.S. officials.

Shares of TD Bank fell as much as 8% on Thursday after the company pleaded guilty and agreed to pay a $3 billion fine stemming from charges over its anti-money laundering practices.

The fine is the largest anti-money laundering penalty U.S. officials have ever imposed on a bank, surpassing the nearly $2 billion fine HSBC paid in 2014 for transferring billions of dollars on behalf of Mexican drug cartels.

The US arm of Canada-based TD Bank also accepted an asset limit set by the Office of the Comptroller of the Coin on how much the asset size can grow.

While the asset cap is in place, the bank cannot grow beyond its current asset size of $370 billion.

This is the first time an asset limit has been imposed on a bank since 2018, when Wells Fargo accepted an asset limit due to the fake account opening scandal.

“The OCC’s coordinated and comprehensive action, including imposing an asset limit, will ensure the bank focuses on building sound controls that match its risk profile,” said Acting Comptroller of the Currency Michael Hsu.

The charges stem from an investigation that found TD Bank did not have proper anti-money laundering practices.

The lack of controls allowed a money laundering scheme by Chinese drug cartels linked to the sale of fentanyl to take place.

The Chinese criminal operation involved bribing bank tellers at TD branches in New York and New Jersey, allowing the laundering of hundreds of millions of dollars in fentanyl sales.

TD Bank’s settlement includes the Department of Justice, FinCEN, the Federal Reserve and the OCC.

In a statement in August, TD Bank CEO Bharat Masrani said: “We recognize the severity of the shortcomings of our U.S. AML program and the work required to meet our obligations and responsibilities is of the utmost importance to me, our senior leaders and our boards of directors.”

Masrani has since said he will retire from the company in April.

TD Bank stock has since pared its gains to about 6%, trading at $59.88 at 1:29 p.m. in New York.

TD did not immediately respond to a request for comment.