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

TD Bank has made history as the largest U.S. financial institution to ever admit guilt in violating federal anti-money laundering regulations. The bank has agreed to pay $3 billion in fines to settle these charges, as announced by government officials on Thursday.

The settlement, which includes an unusual restriction on the bank’s assets and other business restrictions, follows several government investigations into what authorities describe as widespread problems within TD Bank. Officials said TD turned a blind eye to warning signs from high-risk customers for an extended period of time, creating an environment where unlawful activity could thrive.

According to the Justice Department, two branches of the bank have pleaded guilty to charges of conspiracy to commit money laundering and conspiracy to neglect the proper filing of reports and maintenance of an adequate anti-money laundering system.

“TD Bank chose profit over compliance to keep costs down,” Attorney General Merrick Garland said at a news conference. He added that TD’s admission is the largest violation of the U.S. Bank Secrecy Act by a financial institution to date.

The rare asset limit, imposed by the Office of the Comptroller of the Monetary Fund, represents a serious sanction and deals a significant blow to TD Bank, which has been trying to expand its presence in the US, a market that accounts for a third of her total assets. gain.

“This is a difficult chapter in the history of our bank. These failures occurred under my watch as CEO and I apologize to all our stakeholders,” CEO Bharat Masrani said in a formal statement.

Over nearly a decade, TD Bank failed to properly investigate more than $18 trillion in customer transactions, allowing three major money laundering networks to funnel illicit money, including funds from the international drug trade, through its accounts, U.S. officials revealed, citing the bank identified issues as equally extensive.

Employees at the bank “openly joked” several times about the lack of proper supervision, Garland told the press during the settlement announcement.

Authorities reported that TD’s failures were known at all levels of the organization. In certain situations, the bank did not report questionable activity until the police brought it to their attention. In addition, tellers were sometimes bribed with gift vouchers.

“It’s no wonder that the motto America’s most convenient bank was used as a joke among employees to describe TD Bank as convenient for criminals,” noted Philip Sellinger, U.S. Attorney for New Jersey.

The total fines of $3 billion will be split between the Justice Department, U.S. banking regulators and the Treasury Department’s Financial Crimes Enforcement Network.

In addition to the financial sanctions, TD Bank will face independent supervision. The settlement also restricts TD from opening new branches or entering new markets without prior approval from the Office of the Comptroller of the Coin, regulators noted.

Cormark Securities analyst Lemar Persaud said before the settlement was finalized that an asset cap represents a “worst-case scenario” for TD. The bank had already set aside $3 billion to cover the fine.

Persaud compared the situation to that of Wells Fargo, which has been restricted by a $1.95 trillion asset cap since the counterfeit accounts scandal. While such a limit will have an impact on TD’s revenues, it is expected to be less damaging than the effect on Wells Fargo, Persaud said.

The ongoing investigation into TD Bank has contributed to the stock’s significant underperformance and likely influenced the impending retirement of CEO Bharat Masrani, Persaud added.

TD Bank, Canada’s second-largest lender and the 10th-largest bank in the U.S., first announced its cooperation with regulators and law enforcement agencies last year, shortly after abandoning a $13 billion deal to expand the regional to acquire lender First Horizon.

Federal authorities launched an investigation into TD’s internal operations after learning that a Chinese criminal organization had bribed bank employees and moved large amounts of cash to its branches to launder millions of dollars from fentanyl sales in New York and New Jersey washing, a source confirmed.

In response, TD spent millions on strengthening its compliance measures, laid off dozens of staff from its U.S. offices and appointed Ray Chun, head of Canada’s personal banking division, as its new CEO, distancing the bank’s leadership from the scandal.

CEO Masrani, who led the bank for nearly a decade and previously oversaw its U.S. operations, will step down next year. He has taken full responsibility for the failed money laundering schemes that have damaged the bank’s reputation.

TD has already started to address the issues and clawed back compensation from executives, with authorities noting that the bank is the first to proactively agree to such measures.

{Matzav.com}