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The Canadian bank with U.S. headquarters in Cherry Hill pleaded guilty to charges of conspiring to not maintain an anti-money laundering program that complies with the Bank Secrecy Act, filing inaccurate currency transaction reports, and laundering money, the Justice Department said in a news release on Thursday, Oct. 10.
TD Bank will pay more than $1.8 billion to resolve the DOJ's investigation and $1.3 billion in a penalty from the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
"By making its services convenient for criminals, TD Bank became one," said Attorney General Merrick Garland. "Today, TD Bank also became the largest bank in U.S. history to plead guilty to Bank Secrecy Act program failures, and the first US bank in history to plead guilty to conspiracy to commit money laundering. TD Bank chose profits over compliance with the law — a decision that is now costing the bank billions of dollars in penalties.
"Let me be clear: our investigation continues, and no individual involved in TD Bank’s illegal conduct is off limits."
According to court documents, TD Bank had "pervasive and systemic deficiencies" in its anti-money laundering policies and controls between January 2014 and October 2023. Senior executives enforced a "flat cost paradigm," a mandate that required the bank's budget to not increase annually despite rising profits.
The bank's anti-laundering program "appeared adequate on paper" but its flaws allowed financial criminals to make the bank "an easy target."
"TD Bank prioritized growth and convenience over following its legal obligations,” said New Jersey's U.S. Attorney Philip Sellinger. "As a result of staggering and pervasive failures in oversight, it willfully failed to monitor trillions of dollars of transactions – including those involving ACH transactions, checks, high-risk countries, and peer-to-peer transactions – which allowed hundreds of millions of dollars from money laundering networks to flow through the bank, including for international drug traffickers.
"The bank was aware of these risks and failed to take steps to protect against them, including for two networks prosecuted in New Jersey and elsewhere – one that dumped piles of cash on the bank’s counters and another that allegedly withdrew amounts from ATMs 40 to 50 times higher than the daily limit for personal accounts."
The DOJ said TD Bank's federal regulators and internal audit group repeatedly identified concerns about its transaction monitoring program over the last decade. Despite that, the program was "effectively static" from 2014 through 2022 by not adapting to new and growing money laundering risks.
TD Bank also failed to properly fund and staff its anti-money laundering program in order to prioritize its "flat cost paradigm" and the "customer experience."
"From fentanyl and narcotics trafficking, to terrorist financing and human trafficking, TD Bank’s chronic failures provided fertile ground for a host of illicit activity to penetrate our financial system," said Deputy Treasury Secretary Wally Adeyemo. "Our historic action represents a significant step in safeguarding our country and communities from criminal activity like fentanyl and human trafficking by requiring TD Bank to fix the vast deficiencies in its safeguards against money laundering.
"The Biden-Harris Administration is committed to taking action to keep our communities safe from the sort of behavior facilitated by illicit finance and enabled by TD Bank’s lax oversight, and we are making clear that financial institutions will face severe repercussions if they fail to maintain necessary safeguards.”
The 10th-largest U.S. bank by assets intentionally didn't automatically monitor all domestic automated clearinghouse (ACH) transactions, most check activity, and other types of transaction types. The DOJ said about $18.3 trillion in transactions — about 92 percent of TD Bank's total volume — wasn't monitored from Monday, Jan. 1, 2018, to Friday, April 12, 2024.
TD Bank also failed to improve existing transaction monitoring systems and started using new products like Zelle without ensuring their security.
"For years, TD Bank starved its compliance program of the resources needed to obey the law," said Deputy Attorney General Lisa Monaco. "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."
TD Bank also didn't "meaningfully monitor transactions involving high-risk countries" and told staff to stop filing internal unusual transaction reports on some suspicious customers. The bank also allowed more than $5 billion in transactions from accounts even after the bank decided to close them.
Employees said TD Bank's anti-money laundering program problems made it "convenient" for criminals.
"For over a decade, TD Bank allowed its [anti-money laundering] program to languish, making TD Bank a target for illicit actors—including its own employees," said FinCEN director Andrea Gacki. "The magnitude of FinCEN’s action is consistent with the harm that TD Bank’s failures caused."
One money laundering network transferred more than $470 million through TD Bank accounts between January 2018 and February 2021. The suspects gave employees gift cards worth more than $57,000 to ensure they would keep processing the suspicious transactions despite depositing well over $10,000.
A "high-risk jewelry business" used TD Bank shell accounts between March 2021 and March 2023. The business moved nearly $120 million before the bank reported the activity.
In another scheme, laundering networks deposited money in the U.S. and quickly withdrew it from ATMs in Colombia. Five TD Bank employees conspired with this network and issued dozens of ATM cards to suspects, allowing about $39 million to be laundered.
More than two dozen people have been charged by the DOJ in the schemes, including two bank insiders. As part of its plea deal, TD Bank agreed to continue cooperating with the investigations.
In addition to the $3 billion in fines and penalties, the bank also agreed to retain an independent compliance monitor for three years and make improvements to its anti-money laundering program.
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