A $3 billion fine by US Department of Justice on Canada's second largest lender - Toronto-Dominion Bank - has revealed how suspicious transactions were overlooked for nearly a decade at its US branches.
TD Bank, which is also the tenth largest bank in USA, had pleaded guilty to charges of 'money laundering and illicit finance' last week, and a US Justice Department statement revealed a deeper rot that had been going on for years. "By making its services convenient for criminals, TD Bank became one,” Attorney General Merrick B Garland said in the statement, adding that "TD Bank chose profits over compliance with the law."
Shares of TD Bank have crashed since the US DoJ penalty and curbs on business, falling 10% since October 10. The lender has a market capitalisation of around $100 billion on the Toronto Stock Exchange.
The US Department of Justice revealed that TD Bank had 'starved' its compliance program of the resources that it needed in order to comply with the law. Deputy Attorney General Lisa Monaco called it an 'unmistakable lesson', adding that "crime doesn’t pay — and neither does flouting compliance."
US DoJ said that TD Bank failed to update its anti-money laundering compliance for nearly a decade, ignoring known risks. "As bank employees acknowledged in internal communications, these failures made the bank an ‘easy target’ for the ‘bad guys,’" Principal US Assistant Attorney General Nicole M Argentieri said.
US court documents showed that between January 2014 and October 2023, TD Bank had 'long-term, pervasive, and systemic deficiencies' in its US anti-money laundering controls, but the lender failed to take appropriate remedial action.
DoJ release said that TD Bank did not fund or staff its program to detect money laundering, and chose to prioritize cost effectiveness and 'customer experience', making it “convenient” for criminals, as highlighted by bank's employees.
The US DoJ findings reveal that that these failures enabled three money laundering networks to collectively transfer more than $670 million through TD Bank accounts between 2019 and 2023.
In another instance, money laundering networks deposited funds in the United States, and quickly withdrew those funds using ATMs in Colombia. TD Bank employees had conspired with this network of money launderers to issue dozens of ATM cards. The US Justice Department has charged over two dozen individuals, including two bank insiders, and TD Bank is required to continue cooperation in ongoing investigations.
CEO of TD Bank Group, Bharat Masrani has taken 'full responsibility' of the wrongdoings, and apologized to all its stakeholders. "These failures took place on my watch as CEO and I apologize to all our stakeholders," Masrani had said last week.
Over a three-year period, a person named 'David' moved over $470 million in illegal funds through TD Bank branches in the United States, bribing bank employees in gift cards in further his scheme, said US Attorney General Merrick Garland said. The same money laundering network reused Venezuelan passports to open multiple accounts, and obtained multiple debit cards for a single account.
In another instance, DoJ revealed that TD Bank employees conspired with criminals to maintain accounts that were used to launder $39 million to Colombia, including drug proceeds.
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