TD Bank fined $3 billion as part of a historic money laundering settlement

TD Bank, one of Canada's largest lenders, has agreed to pay more than $3bn (£2.3bn) and subsequently pleaded guilty in the US Allowing drug cartels and other criminals to transfer hundreds of millions of dollars in illegal funds.

Prosecutors said the bank had inadequate anti-money laundering policies for nearly a decade, failing to act even when employees reported obvious cases of abuse, such as when a customer deposited $1 million in cash daily.

The lender now faces restrictions on growth in the US – and its biggest ever fine under anti-money laundering laws.

TD Bank's chief executive said the bank takes “full responsibility” for its failures.

Bharat Masrani said the bank has the financial strength to weather the situation and will make “the investments, changes and improvements necessary to meet our commitments.”

The bank said it would be a multi-year process, but it had already taken some steps to overhaul its anti-money laundering program and hired more than 700 new employees specializing in the issue.

“This is a difficult chapter in the history of our bank. These failures occurred under my watch as CEO and I apologize to all of our stakeholders,” he said Thursday.

Mr. Masrani announced last month that he would retire in April 2025 after a decade at the helm of the bank.

TD Bank is the largest lender in U.S. history to plead guilty to violations under the Bank Secrecy Act and the first to plead guilty to conspiracy to launder money, the U.S. Department of Justice said.

The growth restriction facing the U.S. retail business under the agreement with regulators is unusual — it is reserved for serious cases of misconduct, such as the fake account fraud uncovered at Wells Fargo several years ago.

Attorney General Merrick Garland said the bank is cooperating with the investigation and expects further individual lawsuits.

“By making its services convenient for criminals, TD Bank has become one,” he said.

At a news conference announcing the charges, U.S. officials said the bank – the 10th largest in the U.S. – had “starved” its compliance investment programs despite its growth.

By 2018, the company had failed to monitor more than 90% of transactions on its network, whose activity amounted to more than $18 trillion, prosecutors said at a news conference.

The compliance gaps were so well known internally that employees joked that the bank's motto – “America's Most Convenient Bank” – was aimed at criminals, they said.

Officials said a customer used TD Bank to launder more than $470 million in drug proceeds, make large cash deposits and bribe employees with gift cards.

The system allowed payments from fentanyl users to flow back to drug networks in Mexico and China, officials said.

Officials said another scheme involved five bank employees who helped issue dozens of ATM cards, facilitating the transfer of $39 million in illicit funds to Colombia.

TD is the sixth largest bank by assets in North America and serves over 27.5 million customers around the world.

The deal announced Thursday will include a period of external monitoring.

The penalties include $1.8 billion to the Justice Department and $1.3 billion to the Treasury Department's Financial Crimes Enforcement Network, as well as payments to other regulators including the Office of the Comptroller of the Currency and the Federal Reserve.

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