Federal authorities have fined TD Bank $3 billion for a “staggering and pervasive money laundering failure” that allowed international drug traffickers to launder more than $670 million through the nation’s 10th largest bank. ordered federal oversight.
U.S. Attorney General Merrick B. Garland said at a news conference in Washington on Thursday that the bank had inadequate controls to detect money laundering and that employees, including managers, had taken bribes and committed crimes. He said he facilitated money laundering by joking with colleagues about enabling the act. , D.C.
Bank officials pleaded guilty Thursday before U.S. District Judge Esther Salas in Newark to multiple felonies, including violating the Bank Secrecy Act and conspiracy to commit money laundering, Garland said.
“Our laws say drug traffickers who flood our communities with deadly drugs cannot use American financial institutions to move funds, and our anti-money laundering laws protect them from their criminal schemes. TD Bank’s failure to maintain an adequate anti-money laundering program from January 2014 to October 2023 led to this.” Garland said.
Over a six-year period from January 2018 to April last year, TD Bank failed to monitor $18.3 trillion in customer activity, resulting in three money laundering networks (two in New Jersey and one in Puerto Rico). ) was able to transfer more than $670 million through TD Bank. Garland said:
In one example cited by Deputy Treasury Secretary Wally Adeyemo, bank employees made false or misleading reports to conceal more than $400 million in laundered funds for traffickers selling fentanyl and other deadly drugs. submitted. One suspected trafficker alone bribed bank employees with at least $57,000 in gift cards, authorities said.
Every bank compliance officer in America should consider today’s accusations as a case study in what not to do.
– U.S. Deputy Attorney General Lisa Monaco
U.S. Deputy Attorney General Lisa Monaco said TD Bank executives were aware of deficiencies in its defenses against money laundering, but despite increased profits, they failed to act or It said it had repeatedly failed to properly fund the program.
“In 2013, federal regulators began punishing banks for lack of money laundering regulations, but TD Bank could only see green because the lights kept flashing red,” Monaco said. “Compliance officers at every bank in America should consider today’s charges as a case study in what not to do, and every bank CEO and board member should do the same.” Because if the business case for compliance wasn’t clear before, it should be now. ”
Mr. Garland and Philip Selinger, the U.S. attorney for New Jersey, said bankers even found humor in the lax controls.
“The motto ‘America’s Most Convenient Bank’ was used as a joke among employees to explain TD Bank’s convenience to criminals,” Selinger said.
Garland said that in August 2021, one bank manager sent an email to another bank manager saying, “You guys really need to shut this down lol.”
In a February 2021 exchange, an employee asked a co-worker, “How is that not money laundering?” after an alleged drug trafficker cashed official bank checks worth more than $1 million in one day. ?” he asked.
The staff member replied, “Oh, 100% yes.”
Thursday’s plea deal makes TD Bank the largest bank in U.S. history to plead guilty to failing Bank Secrecy Act programs and the first bank in history to plead guilty to money laundering conspiracy, Garland said. Garland said the ordered fine is the largest ever under the Bank Secrecy Act and marks the first time the Justice Department has imposed daily fines on a bank as part of a plea agreement.
As part of the plea agreement, bank officials will forfeit $452 million, pay $1.4 billion in criminal and other civil penalties, overhaul the company’s compliance program, and monitor compliance for three years. Agreed to hire independent monitors and report employee misconduct. to federal authorities. Officials also agreed to growth limits that would prevent the U.S. subsidiary’s total assets from exceeding $434 billion.
Garland said the Justice Department has indicted 20 people for their involvement in the scheme. Garland said investigators have identified five “bank insiders” involved, two of whom have faced criminal charges.
The investigation is ongoing, and Banks is expected to cooperate with the investigation as a condition of the plea agreement.
“Anyone involved in TD Bank’s illegal activities will be banned. We will follow the evidence wherever it leads,” Garland said.
Bharat Masrani, group president and CEO of Canada-based TD Bank Group, said the bank “takes full responsibility for the failure” of its U.S. subsidiary and is making necessary reforms. said. He noted that the bank has more than 10 million customers in the United States.
“This is a difficult chapter in our bank’s history. These failures occurred on my watch as CEO, and I apologize to all stakeholders,” Masrani said in a statement.
TD Bank Group Chairman of the Board Alan McGibbon said the company has appointed new leaders across the bank’s U.S. operations.
“Money laundering is a serious global threat, and our U.S. operations did not maintain adequate AML (anti-money laundering) programs to deter criminal activity,” McGibbon said. Ta. “The board has taken and will continue to take steps to address these failures and hold those responsible accountable.”
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