TD Fined $3.1B Hit With Asset Cap Over Money Laundering

What You Need to Know

The news follow Toronto-Dominion Bank’s guilty plea over its failure to prevent money laundering by drug cartels and other criminals.
Two of the bank’s U.S. units entered the pleas to a range of charges Thursday before a federal judge in Newark, New Jersey.
Toronto-Dominion has more than 10 million U.S. customers and almost 1,200 branches concentrated along the East Coast.

Toronto-Dominion Bank will pay almost $3.1 billion in fines and other penalties and face a cap on its U.S. retail banking assets, after pleading guilty to failing to prevent money laundering by drug cartels and other criminals.

Two of the bank’s U.S. units entered the pleas to a range of charges Thursday before a federal judge in Newark, New Jersey. The U.S. Justice Department, Federal Reserve and Office of the Comptroller of the Currency later released statements on a “coordinated resolution” reached with the bank in exchange for its guilty pleas.

“TD Bank had long-term, pervasive, and systemic deficiencies” in its U.S. anti-money-laundering policies and procedures “but failed to take appropriate remedial action,” the Justice Department said in a statement, referencing court filings that documented problems over the course of almost a decade.

The settlement caps a months-long saga and multiple probes into the lender’s failure to catch money laundering and other financial crimes at bank branches in multiple states including New York, New Jersey and Florida.

The combined $3.1 billion of penalties include $1.89 billion to the Justice Department, which is the largest such sanction ever imposed under the Bank Secrecy Act, Deputy Attorney General Lisa Monaco said at a briefing on Thursday.

And while the bank had set aside more than $3 billion in recent months to prepare for the settlement — including selling off some of its stake in Charles Schwab Corp. — the asset cap may hamper the bank’s growth-by-acquisition strategy that it has pursued in US retail banking for much of the past two decades.

The growth restriction applies to its TD Bank NA and TD Bank USA entities, according to the OCC. The bank was also ordered to set up a new US office dedicated to rectifying the deficiencies identified in the order.