US Imposes Record $3billion Fine On TD Bank After Pleading Guilty To Drug Cartel Money Laundering
This was stated in a press statement issued by the US Department of Justice on Thursday, saying that the fine was pronounced after the management of TD Bank pleaded guilty to the money laundering charges pressed against the financial institutions.
It was learnt that the imposed fine includes a $1.3billion penalty that will be paid to the US Treasury Department’s Financial Crimes Enforcement Network, a record fine for a bank.
TD also intends to pay $1.8 billion to the US Justice Department and plead guilty to resolve the US government’s investigation that the bank violated the Bank Secrecy Act and allowed money laundering.
A statement issued by Lisa Monaco, US Deputy Attorney General reads: “Today, one of North America’s largest banks pleaded guilty to some of the most serious charges a financial institution can face.
“This case should serve as a warning and a reminder that we will hold corporate wrongdoers accountable, no matter their size or stature.
“But this case also highlights the critical importance of maintaining a culture of compliance — and offers a cautionary tale of how bad things can go without one. When you put your hard-earned money in a bank – that bank should meet a very basic requirement.
“It should follow the law. For financial institutions, that means — among other obligations — adhering to the Bank Secrecy Act (BSA).
“This law is fundamental — not only for protecting our financial system — but also our national security. The BSA requires that banks: Maintain robust anti-money laundering programs; Report suspicious activity; and Train employees to be the first line of defense against money laundering.
“Despite being one of the largest banks in the country, TD Bank failed to meet these requirements and violated the law. Even as profits rose, the bank starved its compliance program of the resources it needed to obey the law.
“Time and time again, TD Bank failed to meet its obligations — day after day, year after year.
The problems were so widespread — so pervasive — that it was only a matter of time before the bank’s own employees could exploit these failures and engage in money laundering themselves.
“And that’s exactly what happened. As TD Bank admitted in its plea today, its anti-money laundering failures spanned nearly a decade.
“Things got so bad that five of the bank’s own employees participated in a scheme that laundered millions of dollars to Colombia, resulting in felony convictions for individuals both inside and outside the bank.
“What makes this even more troubling is that — for years — TD Bank knew of its compliance failures. In 2013, federal regulators began penalizing the bank for its lack of money laundering controls.
“But as the light continued blinking red, TD Bank could only see green. Every bank compliance official in America should be reviewing today’s charges as a case study of what not to do.
“And every bank CEO and board member should be doing the same. Because if the business case for compliance wasn’t clear before — it should be now.
“The Bank Secrecy Act includes a unique penalty provision: the ability to fine a financial institution up to $500,000 for each day it lacks a functional anti-money laundering program.
“The daily fine provision is rarely used. In fact, the Justice Department has never before sought this maximum daily penalty against any financial institution.
Until now. The financial penalty under today’s resolution is based on TD Bank’s failure to maintain an effective anti-money laundering program every single day from the beginning of 2014 to the end of October 2023.
Today’s guilty plea — and the resulting $1.8 billion penalty — represents the largest penalty ever imposed under the Bank Secrecy Act. And it provides an unmistakable lesson: crime doesn’t pay. And neither does flouting compliance.
“This resolution also sets a new course for TD Bank. With today’s guilty plea, TD Bank has agreed to tough new rules. It must overhaul its compliance program;It must retain an monitor; It must report misconduct to the government; and It must cooperate in our ongoing criminal investigations into the individuals responsible – up and down the corporate ladder.
The bank has begun this work, and we will continue to hold its feet to the fire.”
We are putting down a clear marker on what we expect from financial institutions — and the consequences for failure. When it comes to compliance, there are really only two options: invest now – or face severe consequences later.
“As I’ve said before, a corporate strategy that pursues profits at the expense of compliance isn’t a path to riches; it’s a path to federal prosecution. I want to thank the women and men of the Justice Department’s Criminal Division, the U.S. Attorney’s Office for the District of New Jersey, and investigative partners joining us today for their continued work on this matter.
In one instance, TD Bank employees collected more than $57,000 worth of gift cards to process more than $470 million in cash deposits from a money laundering network to “ensure employees would continue to process their transactions” and not declare them in required reports, the DoJ said.
In a related statement, the Office of the Comptroller of the Currency (OCC), a US agency that regulates banks, said TD processed hundreds of millions of dollars of transactions the clearly indicated highly suspicious activity.
“This is a difficult chapter in our bank’s history,” TD Bank CEO Bharat Masrani in a statement. “These failures took place on my watch as CEO and I apologize to all our stakeholders.”
“We have taken full responsibility for the failures of our US [anti-money laundering] program and are making the investments, changes and enhancements required to deliver on our commitments,” Masrani added.
TD is ramping up its anti-money laundering surveillance efforts, including the hiring of more than 700 new specialists with “experience and qualifications in money laundering prevention, financial crimes, and AML remediation,” as well deploying new processes to “better prevent, detect and measure financial crime risk,” the bank said.
The Canadian bank will be subject to four years of monitoring by FinCEN to observe the lender more closely and ensure it is following the agreement.
