Why TD Bank is at the center of a money laundering scandal

Recently, TD Bank pleaded guilty to both civil and criminal charges, including conspiracy to violate the Bank Secrecy Act in connection with money laundering. As a condition of the settlement, TD Bank will pay a $1.8 billion penalty. Together with the civil penalties, the total amount the bank will have to pay to settle these charges is $3 billion.

TD Bank is the largest bank to plead guilty to violations of the Bank Secrecy Act. The Bank Secrecy Act, enacted in 1970 to combat money laundering, requires banks to establish and maintain anti-money laundering programs. WBlue-collar crime and street crime, as well as terrorist groups and corrupt politicians, all need to distance themselves from the source of their ill-gotten money, and enforcing anti-money laundering laws can go a long way toward reducing these crimes.

The TD Bank settlement also requires TD Bank to fundamentally restructure its anti-money laundering compliance programs, including providing an independent compliance monitor for four years.

The Justice Department is also prosecuting two dozen individuals for their involvement in money laundering schemes that transferred more than $670 million in illicit funds through TD Bank, as well as two underage TD Bank employees for their involvement in the money laundering schemes.

In addition, the settlement also requires TD Bank to cooperate fully with the Department of Justice’s ongoing investigation into the activities of TD Bank’s officers, directors and employees regarding money laundering violations that occurred at the bank between January 2014 and October 2023. cooperated During this time, TD Bank failed to monitor $18.3 trillion in questionable customer activity.

In September, the bank’s president and CEO, Bharat Masrani, announced that he would retire in April 2025. No charges have been filed against Masrani at this time, and if history is anything to go by, none will be filed. The sword of Damocles that hangs over the bank if it does not fully cooperate with the Department of Justice’s further investigation into its officers, directors and employees is the risk of further criminal charges that could be brought against the bank if the facts admitted in the consent agreement are established Decree can be used as evidence against the bank.

Attorney General Merrick Garland commented on a particular drug dealer he referred to as “David” who laundered money through TD Bank: “David had attempted to launder money through numerous financial institutions.” However, he noted that TD Bank’s policies and procedures were the most permissive and chose to launder most of his funds there. To further his scheme, he also bribed TD Bank employees with over $57,000 worth of gift cards. David’s illegal behavior was obvious to say the least. On more than one occasion, he deposited more than $1 million in cash in a single day. He then immediately withdrew the money from the bank using official cashier’s checks and wire transfers.”

Further commenting on David’s activities with the bank, Garland said in a press conference: “In February 2021, a TD Bank branch employee saw that David’s network had purchased over $1 million in official bank checks with cash in a single day.” The Employee asked, “How is this not money laundering?” A back office employee replied, “Oh, that’s 100% true.”

Garland also mentioned during his press conference that TD Bank employees laughed at the bank’s slogan, “America’s Most Convenient Bank,” saying, “Employees repeatedly joked on the bank’s instant messaging platform about the bank’s motto, ‘America’s.’ most convenient bank’.” They linked it to the bank’s approach to combating money laundering. For example, a compliance employee asked a colleague why ‘all the really terrible people make bank here, lol’. The colleague replied: ‘Because we are comfortable.’”

This is not the first time that TD Bank has violated money laundering laws and regulations. In 2013, the bank paid $52.5 million to settle money laundering charges against convicted Ponzi schemer Scott Rothstein. This settlement recognized that TD Bank’s internal controls were inadequate to detect and prevent money laundering.

Law enforcement actions against major banks such as TD Bank have resulted in large fines in the past, such as in 2012 when HSBC was fined $1.9 billion for laundering money for drug cartels, terrorist organizations and sanctioned countries such as Iran and North Korea . However, no individual banker was charged. Whether the Justice Department’s ongoing investigation into TD Bank officials, directors and employees will result in actual people, rather than just the banks themselves, being charged with these crimes remains to be seen. However, until this happens, there is no reason to believe that money laundering will continue to be good business for banks.