Today, TD Bank N.A. (TDBNA), the 10th largest bank in the United States, and its parent company TD Bank US Holding Company (TDBUSH) pleaded guilty to serious violations of the Bank Secrecy Act (BSA) and anti-money laundering (AML) requirements. The investigation by the Justice Department in the case determined that there was a grave failure to comply with its anti-money laundering program that made it suffer the largest fine in history worth $1.8 billion.
The agreement is in cooperation with the Federal Reserve Board (FRB), Office of the Comptroller of the Currency (OCC), and the Financial Crimes Enforcement Network (FinCEN) and recorded the largest BSA-related penalty in the history of the United States.
As attorney general, Merrick B. Garland said, “TD Bank chose profits over compliance, made its services accessible to criminal networks, and is now paying the price. This case serves as a stark reminder that financial institutions must prioritize regulatory obligations over profits.”
Critical oversights and unchecked criminal activity
It’s not too difficult to envision that during the period between 2014 and 2023, failures by TD Bank to comply with AML standards and to detect suspicious activity left the financial institution vulnerable to exploitation by criminal enterprises. As the Justice Department details in its report, TD Bank maintained an inadequate compliance program under the circumstances and had an internal policy known as a “flat cost paradigm,” which capped the annual budget increase for AML resources. The existence of such a policy occurred even though TD Bank raked in massive gains and risk exposure increased during those years.
According to Deputy Attorney General Lisa Monaco, the historic plea “represents a case study of what not to do,” and she adds that such a resolution clearly outlines the high cost of neglecting compliance.
A Systematic Failure to Address Known Risks
For years, TD Bank was well aware of the money laundering risks that were emerging but constantly pushed back on some enhancements to the transaction monitoring systems. Principal Assistant Attorney General Nicole M. Argentieri pointed out that internal bank communications described TD Bank as an “easy target” for criminals. Such weaknesses allowed criminal networks and corrupt employees to channel over $670 million through the bank.
As US Attorney Philip R. Sellinger of the District of New Jersey noted about the reach of the oversight failures: “TD Bank prioritized growth above all else, including legal obligations, resulting in an open spigot of illicit funds being washed into its operations.” Such negligence enabled massive money laundering operations by international drug trafficking organizations and high-risk financial transactions.
Terms of the Plea Agreement and Penalties
This settlement of the Justice Department against TD Bank leads to a monetary forfeiture of $452.4 million and a criminal fine of $1.43 billion in monetary sanction, totaling $1.88 billion. In addition to the ones mentioned earlier, TD Bank is required to maintain an independent compliance monitor for three years. The bank has separately settled with FRB, OCC, and FinCEN. The Justice Department has applied the Forfeiture of $123.5 million towards the resolution of the financial institution with FRB.
Continuing Investigations and Further Steps
Although the sentences handed down to TD Bank are partly as a result of cooperation, the Justice Department did not grant full credit for several reasons. First, it argues that TD Bank failed to promptly escalate some of the AML concerns identified as critical. The plea agreement demands further cooperation with the ongoing investigations regarding individuals involved in the misconduct.
It was researched into and investigated by the IRS Criminal Investigation, the Federal Deposit Insurance Corporation Office of Inspector General, and the DEA with various other law enforcers. D. Zachary Adams and Chelsea R. Rooney both were from the Justice Department’s Money Laundering and Asset Recovery Section (MLARS), while the lead on the case in the District of New Jersey was Assistant United States Attorney Mark J. Pesce and Assistant United States Angelica Sinopole.
In the three years since its formation in 2010, the MLARS Bank Integrity Unit has leveled over $25 billion in penalties across multiple cases, demonstrating the strength of responsibility to financial sector institutions.
With the recent TD Bank money laundering case shedding light on serious regulatory violations, consulting a criminal defense attorney in Denton could be vital for individuals and businesses in financial services facing scrutiny. Knowledgeable in both compliance and criminal law, these attorneys provide invaluable guidance through complex cases. Moreover, Denton DWI attorneys offer focused support to clients dealing with criminal charges, ensuring their rights are protected throughout intricate legal processes.