Toronto-Dominion Bank (TD Bank) faces an unprecedented $3.09 billion fine after pleading guilty to multiple charges of money laundering and conspiracy to violate the Bank Secrecy Act. U.S. regulators, led by the Department of Justice (DOJ), have levied the largest financial penalty in U.S. history for such violations, citing the bank’s “willful” neglect of transaction monitoring that allowed billions in illegal funds to flow through its system.
The U.S. Office of the Comptroller of the Currency (OCC) has also imposed a cease-and-desist order on TD Bank, which includes non-financial penalties such as an asset cap, limiting the bank’s future growth in the U.S. market. According to the OCC, TD Bank experienced “significant, systemic breakdowns” in its anti-money-laundering controls.
U.S. Attorney General Merrick Garland condemned the bank’s actions, stating, “TD Bank made itself a haven for financial criminals by failing to act when employees knew illegal activities were taking place.” Over a six-year period, TD Bank allowed more than $670 million to be laundered through its accounts by three major networks—activities that employees were aware of but failed to stop.
One of the most egregious cases involved five TD Bank employees who helped launder drug money. U.S. regulators and the DOJ coordinated efforts, leading to the multibillion-dollar fine. TD Bank has agreed to pay $1.8 billion to the DOJ for criminal charges related to its role in these schemes.
Bharat Masrani, TD Bank’s CEO, acknowledged the gravity of the situation. “We accept full responsibility and are committed to making the necessary changes and investments to prevent this from happening again,” Masrani said in a statement.
The DOJ’s investigation revealed that TD Bank repeatedly ignored red flags raised by its internal audit teams between 2014 and 2022. Despite concerns, the bank failed to enhance its transaction monitoring systems. One laundering network was described by U.S. Attorney Philip R. Sellinger as “dumping piles of cash on the bank’s counters,” while another withdrew amounts far exceeding personal account limits.
One standout case involved an employee named “David,” who moved over $470 million in illicit funds through TD Bank branches. David, who has since pleaded guilty, identified TD Bank’s lax policies as a key reason for choosing the institution to launder money. His activities included depositing over $1 million in a single day and bribing other employees with over $57,000 in gift cards to aid his operations.
TD Bank has agreed to a complete overhaul of its anti-money-laundering (AML) program as part of the settlement, which includes a three-year monitoring period and five years of probation. New services offered by U.S. branches will now be subject to stricter regulatory approval.
The OCC’s asset cap will not affect TD Bank’s operations in Canada or other international locations, but it will severely limit the bank’s U.S. expansion, where it ranks as the 10th largest bank. As TD Bank prepares for a leadership transition, Raymond Chun is set to replace Masrani, who will retire next year. Speaking to investors, Masrani expressed regret, saying, “We should have done better. We recognize the issues and are actively fixing them.”
This historic case sends a clear message about the importance of robust transaction monitoring in preventing money laundering and other financial crimes.