US officials on TD Bank as ‘easy target’ for money laundering

TORONTO (Reuters) – TD Bank became the largest bank in U.S. history to plead guilty to Bank Secrecy Act program failures on Thursday, and the first bank in history to plead guilty to conspiracy to commit money laundering.

Below are comments from U.S. government officials describing how TD’s lapses led to $3 billion in penalties, an asset cap and independent monitoring of its operations. Some quotes have been edited for length.

U.S. ATTORNEY GENERAL MERRICK GARLAND:

“Over the course of a three-year period, a person who TD Bank employees knew as David moved over $470 million in illicit funds through TD Bank branches in the United States.

“He found that TD Bank had the most permissive policies and procedures, and so chose to launder most of his funds there. He also bribed TD bank employees more than $57,000 in gift cards.

“On more than one occasion, he deposited more than $1 million in cash in a single day, and immediately moved the funds out of the bank using official bank checks and wire transfers.

“TD Bank employees at many levels understood and acknowledged the likely illegality of David’s activity. In August 2021, a TD Bank store manager emailed another store manager: ‘Guys really need to shut this down, LOL.’

“In late 2020, another store manager employed his supervisors, several TD Bank regional managers to act, noting that, ‘it is getting out of hand, and my tellers are at the point that they don’t feel comfortable handling these transactions.’

“In February 2021, one TD Bank store employee saw that David’s network had purchased more than $1 million in official bank checks with cash in a single day. The employee asked, ‘how is that not money laundering?’ A back office employee responded, ‘oh, it 100% is.’

“In a second, separate money laundering scheme, five TD Bank employees conspired with criminal organizations to open and maintain accounts at the bank that were used to launder $39 million to Colombia, including drug proceeds.”

DEPUTY U.S. ATTORNEY GENERAL LISA MONACO

“This case should serve as a warning and a reminder that we will hold corporate wrongdoers accountable, no matter their size or their stature.

“Even as profits rose, the bank starved its compliance program of the resources it needed to obey law. Time and time again, TD Bank failed to meet its obligations.

“The problems were so widespread, so pervasive, that it was only a matter of time before the bank’s own employees could exploit these failures and engage in money laundering themselves. And that’s exactly what happened.

“The financial penalty under today’s resolution is based on TD bank’s failure to maintain an effective anti money laundering program every single day from the beginning of 2014 to the end of October 2023.

“Today’s guilty plea and the resulting $1.8 billion penalty represents the largest penalty ever imposed under the Bank Secrecy Act, and it provides an unmistakable lesson: crime doesn’t pay, and neither does flouting compliance.”

U.S. DEPUTY TREASURY SECRETARY WALLY ADEYEMO

“The vast majority of financial institutions work hand-in-hand with Treasury to keep our country and our communities safe. TD Bank has done the exact opposite.

“I want to be clear, these systemic failures did not just create hypothetical vulnerabilities, but they resulted in actual material harm to the American people and our communities.

“Unlike its peers, TD Bank prioritized growth and profits over complying with the law, the bank enabled drug trafficking.

“TD Bank facilitated over $400 million in transactions to launder money on behalf of criminals that were selling fentanyl and other deadly drugs that are poisoning our neighborhoods.”

PRINCIPAL DEPUTY U.S. ATTORNEY GENERAL NICOLE ARGENTIERI

“TD placed profits over compliance … growing risks while profits soared.

“The bank knew that it had pervasive and systemic deficiencies in its AML (anti-money laundering) program, including a transaction monitoring system that remained stagnant over the course of 10 years, despite warnings from regulators, consultants, even its own employees.

“AML employees joked that the bank’s failed AML system made TD an easy target and a convenient bank for bad actors, and they were right.”

ATTORNEY FOR THE DISTRICT OF NEW JERSEY PHILIP SELLINGER

“TD bank intentionally excluded common types of financial transactions from its automated transaction monitoring system.

“From January 2018 to April 2024 TD bank failed to monitor approximately 92% of its total transactions, amounting to approximately $18.3 trillion of transaction activity.

“In April 2017 the bank began offering access to Zelle, which allowed customers to transfer money using their mobile devices. But TD bank effectively created no way to monitor activity, so that, for example, a drug trafficker could transfer thousands of dollars a month without being flagged.

“It’s no wonder, then that the motto ‘America’s most convenient bank’ was used as a joke among employees to describe TD Bank being convenient for criminals.”