Why TD Bank is at the Center of a Money Laundering Scandal

TD Bank recently pleaded guilty to civil and criminal charges, including conspiracy to violate the Bank Secrecy Act related to money laundering. As a condition of the settlement, TD Bank will pay a $1.8 billion criminal penalty which, when added to the civil fines, will bring the total to $3 billion the bank will pay to settle these charges.

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

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

The Justice Department is also prosecuting two dozen people for their involvement in money laundering schemes that moved more than $670 million in illicit funds through TD Bank along with two junior TD Bank employees for the their involvement in money laundering schemes.

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

In September, the bank’s chairman and CEO, Bharat Masrani, announced that he will 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. . The sword of Damocles hanging over the bank if it does not fully cooperate with the Justice Department’s subsequent investigations into its officers, directors and employees is the threat of additional criminal charges that could be brought against the bank with the facts admitted to the consent Decree capable of being used as evidence against the bank.

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

Additionally, commenting on David’s activities with the bank, Garland said in a press conference: “In February 2021, a TD Bank store employee saw that David’s network had purchased over 1 million dollars in official bank checks in one day The employee asked, “How is that not money laundering.” A back-office employee replied, “Oh, it is 100%.

Garland also mentioned that TD Bank employees laugh at the bank’s America’s Most Convenient Bank slogan” during his press conference saying, “Employees constantly joked on the bank’s instant messaging platform about the slogan of the bank, “America’s most convenient bank.” They linked this to the bank’s approach to fighting money laundering. For example, a compliance officer asked a colleague why “all the really awful ones are here lol” The colleague replied, “because we’re convenient”.

This is not the first time TD Bank has run afoul of money laundering laws and regulations. In 2013, the bank paid $52.5 million to settle charges related to its laundering funds for convicted Ponzi mastermind Scott Rothstein. That settlement acknowledged that TD Bank’s internal controls were not sufficient to detect and prevent money laundering.

The history of police actions against large banks such as TD Bank has resulted in large fines, 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. It remains to be seen whether the Justice Department’s ongoing investigation of TD Bank officers, directors and employees will result in real people and not just the banks themselves being criminally charged for these crimes. Until that happens, though, there’s no reason to think banks won’t continue to find good money-laundering deals.