TD Bank Reportedly Facing $3 Billion Money Laundering Penalty

TD Bank’s American unit is reportedly set to plead guilty to anti-money laundering failures.

The Toronto-based bank is expected to pay a roughly $3 billion penalty and agree to limits on its growth in the U.S. as part of the plea deal, the Wall Street Journal (WSJ) reported late Wednesday (Oct. 9).

Sources told the WSJ that — under the plea agreement — the U.S. Office of the Comptroller of the Currency is expected to place an asset cap prohibiting TD’s retail business from expanding beyond a certain level in the U.S.

In addition, the Justice Department and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) plan to install independent monitors to watch the bank and make sure it complies with the pact, the sources said. One source told the WSJ that the FinCEN monitor is expected to be in place for four years.

According to the WSJ sources, the largest chunk of the penalties — around $1.8 billion — will go to the Justice Department, with FinCEN getting $1.3 billion. The plea could be announced as soon as Thursday (Oct. 10), the report said.

PYMNTS has contacted TD for comment but has not yet gotten a reply.

The U.S. Justice Department began investigating TD’s anti-money laundering (AML) practices after learning that a criminal Chinese operation had laundered hundreds of millions of dollars from drug trafficking through the bank’s branches in New York and New Jersey, while also bribing TD employees.

The bank has said it has since taken steps to improve its AML measures. The case has also led to the departure of President and CEO Bharat Masrani, who will retire next year.

“The anti-money-laundering challenges we face took place on my watch as CEO and I take full responsibility,” Masrani said in a statement announcing his retirement. “In the coming months, I will continue to advance and direct the critical remediation program required to meet our obligations and responsibilities and strengthen our risk and control foundation.”

As PYMNTS wrote earlier this year, the case against TD comes amid increasing scrutiny of AML practices in the financial world.

“And where these firms, banks and FinTechs among them, are deemed to come up short, there’s a (literal) price to pay,” that report said. “In the meantime, the very rules governing AML and fraud-fighting efforts may change, as a commentary period is ongoing as regulators seek input on the use of advanced technologies to sharpen fraud defenses at financial institutions.”