On Thursday, Toronto-Dominion Bank, known as TD Bank, pleaded guilty to breaking federal laws that prevent money laundering and ensure bank transparency.
The bank has agreed to pay more than $3 billion and accept restrictions on how it can grow in the future. This decision was made in a Philadelphia court and has significant implications for the bank's operations in the United States.
TD Bank Faces Over $3 Billion in Fines, Restrictions
Federal officials announced that TD Bank failed to properly manage its banking operations. This failure allowed a subsidiary to be used for laundering hundreds of millions of dollars related to drug trafficking. Between 2018 and 2024, the bank did not adequately oversee an enormous $18.3 trillion in customer transactions.
This oversight failure enabled three money laundering networks to move millions of dollars through TD Bank accounts.
During a press conference, Attorney General Merrick Garland stated, TD Bank created an environment that allowed financial crimes to flourish. By making its services convenient for criminals, it became one."
The Department of Justice (DOJ) is currently pursuing legal action against about two dozen individuals involved in these money-laundering schemes. These operations are alleged to have funneled over $670 million in illegal funds through TD Bank accounts. Among those charged are two employees of TD.
TD Bank CEO Apologizes for Anti-Money Laundering Failures
Bharat Masrani, the President and CEO of TD Bank, expressed regret over the failures in the bank's anti-money laundering (AML) program. He stated, "This is a difficult chapter in our bank's history. These failures took place on my watch as CEO, and I apologize to all our stakeholders."
He assured the public that the bank is committed to making necessary changes and improvements to prevent such issues in the future.
As part of the agreement with federal officials, TD Bank will pay a record $1.4 billion fine to the DOJ, along with an additional $1.3 billion to the Treasury Department's Financial Crimes Enforcement Network.
The bank will also pay $450 million to the Office of the Comptroller of the Currency and another $123.5 million to the Federal Reserve. This total marks the highest penalty ever imposed under the Bank Secrecy Act.
The agreement also includes independent oversight for four years, and TD Bank will be prohibited from opening new branches or entering new markets without prior approval from the Office of the Comptroller of the Currency.
According to USA Today, financial analyst Lemar Persaud noted that this outcome for TD Bank is similar to past cases, including the issues faced by Wells Fargo. Since 2018, Wells Fargo has had its earnings limited by a $1.95 trillion asset cap due to a scandal involving fake accounts.
Persaud commented that while restrictions on TD Bank's profitability would occur, it would not be as severe as the impact on Wells Fargo.
The investigation into TD Bank has caused its stock performance to suffer and has contributed to Masrani's decision to retire next year after nearly ten years in charge.
