New York CNN —
TD Bank will pay $3 billion in a settlement for failing to properly monitor money laundering by drug cartels, a person involved in the settlement told CNN.
The fine includes a $1.3 billion fine paid to the U.S. Treasury Department’s Financial Crimes Enforcement Network, the largest ever for a bank. The Wall Street Journal first reported the news.
Canadian banks will also be subject to four years of oversight by FinCEN to more closely monitor lenders and ensure they are complying with agreements.
TD Bank declined to comment on the fine, but the bank plans to hold a conference call with investors later Thursday.
Thursday’s tough penalties from regulators caught Wall Street by surprise. TD Bank (TD)’s U.S.-listed shares fell 5% as investors worried about rising litigation costs and slowing growth.
“We believe the market is becoming increasingly comfortable with the idea that TD will not be subject to any growth constraints,” Jefferies analyst John Aiken said in a note to clients Thursday. “TD will need to find new avenues for growth away from its traditional reliance on U.S. retail banking.”
TD Bank paid $1.2 billion last year to settle a lawsuit alleging its involvement in a notorious $7 billion pyramid scheme orchestrated by disgraced financier Allen Stanford more than a decade ago.
The funds were used to repay victims, but the bank denied any wrongdoing.
Officials at the Justice Department and Treasury are concerned that Mexican cartels are using the U.S. banking system to launder proceeds from the sale of fentanyl and other drugs that kill tens of thousands of Americans each year. is strengthening.
The couriers laundering money for the cartels “open accounts in banks large and small here in the United States,” a senior Treasury Department official told CNN in May.
According to a CNN report, Treasury and IRS officials earlier this year sought to get a clearer picture of how cartels are abusing the financial system, including by targeting U.S. banks and social media companies on their platforms. The government began explaining that drugs are frequently bought and sold.
One focus of the meeting will be how to leverage information provided by small banks that can uncover the front lines of money laundering in local communities, Treasury officials said.
This is breaking news. Will be updated.
