TD Bank has taken a significant step by pleading guilty to charges related to the violation of anti-money laundering laws, agreeing to pay over $3 billion in penalties to U.S. regulators. The decision, announced on Thursday, is part of the bank's effort to remedy the consequences of its past failures in adhering to the Bank Secrecy Act (BSA). In a significant move, the company will allocate more than $1.8 billion to conclude investigations by the Justice Department concerning its inadequate anti-money laundering (AML) program.
Attorney General Merrick Garland stated, "By making its services convenient for criminals, TD Bank became one." This marks a pivotal moment as TD Bank is now the largest bank in U.S. history to plead guilty concerning failures under the BSA and becomes the first to admit to conspiracy to engage in money laundering. In addition to the substantial sum to the Justice Department, TD Bank is also set to pay a $1.3 billion penalty to the U.S.
Treasury Department's Financial Crimes Enforcement Network (FinCEN). Significantly, the U.S. Federal Reserve imposed an independent fine of $123.5 million against Toronto-Dominion Bank ($TD) for its anti-money laundering violations. Furthermore, the Office of the Comptroller of the Currency levied a civil monetary penalty of $450 million against both TD Bank and TD Bank USA.
In a statement, TD Bank Group confirmed that it had consented to orders from the OCC, the Fed, and FinCEN alongside certain of its U.S. branches. Following the news, shares of Toronto-Dominion Bank, listed on the New York Stock Exchange, fell by 5.3% on Thursday, closing at 59.36. The decline in share prices reflects the market's reaction to the severity of the penalties and the implications for TD Bank's future operations. TD Bank Group's Chief Executive Bharat Masrani addressed the situation, acknowledging the bank's responsibility for failures within its U.S.
AML program. He stated, "We have taken full responsibility for the failures of our U.S. AML program and are making the investments, changes and enhancements required to deliver on our commitments. This is a difficult chapter in our bank's history. These failures took place on my watch as CEO and I apologize to all our stakeholders." TD Bank outlined that the consolidated payment, estimated at $3.09 billion, is predominantly covered by $3.05 billion in provisions the bank had set aside previously.
In light of these penalties, the company has embarked on a significant, multi-year initiative to enhance its AML program. This includes appointing a new head of financial crime risk management in the U.S. and a dedicated BSA and AML officer. As part of the resolution, it is stipulated that total assets of TD Bank and TD Bank USA should not surpass $434 billion.
Additionally, TD Bank USA will now encounter "more stringent" approval protocols for new banking products or services, according to the bank's statement..