Toronto-Dominion Bank (TD Bank) the sicth largest bank in North America will pay $3.09 BILLION in fines to settle a money laundering investigation and compliance program investigation.US Attorney General Merrick Garland says the bank “pled guilty to multiple felonies, including conspiring to violate the Bank Secrecy Act and commit money laundering”.

Under the resolution, the combined assets of TD Bank’s two US banking subsidiaries – TD Bank, NA and TD Bank USA, NA – have also been capped at $434 billion.

In a statement, the US DOJ says: “According to court documents, between January 2014 and October 2023, TD Bank had long-term, pervasive, and systemic deficiencies in its US AML policies, procedures, and controls but failed to take appropriate remedial action.”

The DOJ says: “For years, TD Bank failed to appropriately fund and staff its AML programme, opting to postpone and cancel necessary AML projects prioritising a ‘flat cost paradigm’ and the ‘customer experience’.”

The DOJ claims that the bank’s AML failures “enabled three money laundering networks to collectively transfer more than $670 million through TD Bank accounts between 2019 and 2023”.

Garland says: “TD Bank created an environment that allowed financial crime to flourish. By making its services convenient for criminals, it became one.”

He notes that TD Bank is now the “largest bank in US history to plead guilty to Bank Secrecy Act programme failures, and the first US bank in history to plead guilty to conspiracy to commit money laundering”.

Garland adds: “As part of the plea agreement, TD Bank will fundamentally restructure its corporate compliance programme at its US-based bank, which is the 10th largest in the United States.

“The bank has also agreed to the imposition of a three-year monitorship and a five-year term of probation. While the bank has started its remediation, it will continue to remediate and improve its anti-money laundering compliance programme to ensure that the bank operates lawfully and safely moving forward.”

According to court documents, between January 2014 and October 2023, TD Bank had long-term, pervasive, and systemic deficiencies in its U.S. AML policies, procedures, and controls but failed to take appropriate remedial action. Instead, senior executives at TD Bank enforced a budget mandate, referred to internally as a “flat cost paradigm,” requiring that TD Bank’s budget not increase year-over-year, despite its profits and risk profile increasing significantly over the same period. Although TD Bank maintained elements of an AML program that appeared adequate on paper, fundamental, widespread flaws in its AML program made TD Bank an “easy target” for perpetrators of financial crime.

Over the last decade, TD Bank’s federal regulators and TD Bank’s own internal audit group repeatedly identified concerns about its transaction monitoring program, a key element of an appropriate AML program necessary to properly detect and report suspicious activities. Nonetheless, from 2014 through 2022, TD Bank’s transaction monitoring program remained effectively static, and did not adapt to address known, glaring deficiencies; emerging money laundering risks; or TD Bank’s new products and services. For years, TD Bank failed to appropriately fund and staff its AML program, opting to postpone and cancel necessary AML projects prioritizing a “flat cost paradigm” and the “customer experience.” Here is a copy of the plea agreement https://www.justice.gov/opa/media/1373351/dl

Jeff Newman JD MBA, represents whistleblowers nationwide relating to Medicare and Medicaid fraud, under the state and federal False Claims Act (Qui Tam) laws as well as whistleblowers in major claims under the SEC, CFTC and FINCEN whistleblower programs. He can be reached at Jeff@JeffNewmanLaw.com or at 617-823-3217