TD Bank fined $3 billion for failing to prevent money laundering by drug cartels

TD Bank became the largest bank in U.S. history to plead guilty to violating a federal law aimed at preventing money laundering, agreeing to pay $3 billion in fines to resolve the charges, the officials said. government agencies Thursday.

TD’s plea deal includes imposing an asset limit and other restrictions on its activities, authorities said. The bank has pleaded guilty to conspiracy to commit money laundering and conspiracy to fail to file accurate reports or maintain a compliant anti-money laundering program, the Justice Department said.

TD failed to monitor more than $18 trillion in customer activity for a decade, allowing three money laundering networks to transfer illicit funds through accounts at the bank, US authorities said, describing the problems as widespread.

Bank employees “openly joked” several times about the lack of compliance, Attorney General Merrick Garland told reporters during a briefing on the settlement.

“TD Bank chose profit over compliance to keep costs down,” Garland said. He said TD was the largest bank to admit violating the U.S. Bank Secrecy Act.

In some cases, TD did not identify suspicious activity until police drew attention to it, authorities said.

The asset limit, imposed by the Office of the Comptroller of the Coin, is a rare step usually reserved for serious cases.

It’s a major blow to TD, which has been trying to expand further in the U.S., which accounts for about a third of the bank’s revenue.

The deal also prevents TD Bank from opening a new branch or entering a new market without OCC approval, regulators said.

The combined $3 billion in fines will go to the Justice Department, U.S. banking regulators and the Treasury Department’s Financial Crimes Enforcement Network.

The deal ends investigations by the Justice Department, the Office of the Comptroller of the Monetary Affairs and the Treasury Department’s Financial Crimes Enforcement Network.

It also includes imposing independent oversight.

An asset cap is a “worst case scenario” for TD, Cormark Securities analyst Lemar Persaud said before details of the settlement were announced.

The bank has already set aside $3 billion for the fine.

Persaud drew a parallel with Wells Fargo, which has a $1.95 trillion asset cap after a counterfeit accounts scandal that has limited its revenue.

An asset ceiling would also limit TD’s profits, but less so than for Wells Fargo, he said.

The TD investigation has led to “significant underperformance of the stock and, in our view, the retirement of current CEO Bharat Masrani,” Persaud said.

TD is the second largest bank in Canada and the 10th largest in the US.

The lender first revealed last year that it was responding to inquiries from regulators and law enforcement, just months after terminating a $13 billion acquisition of regional lender First Horizon.

Federal authorities began investigating TD’s internal controls after agents discovered that a Chinese criminal operation had bribed employees and moved large bags of cash into branches to launder millions of dollars in fentanyl sales through TD branches in New York and New Jersey, confirmed a source.

TD has spent millions to strengthen its compliance programs, laid off dozens of employees at its U.S. operations and named Canadian head of personal banking Ray Chun as its new CEO, leading the new chief to distance himself from the money laundering scandal.

CEO Masrani, who has been at the helm for almost a decade and previously headed the US operations, will retire next year.

Masrani has said he takes full responsibility for the money laundering problems plaguing the bank.