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TD Bank has agreed to pay the U.S. government just over $3 billion to settle allegations that it failed to stop criminal organizations from using the Canadian lender to launder hundreds of millions of dollars through its accounts.
The Justice Department said TD had “longstanding, pervasive and systemic deficiencies” in its anti-money laundering program but failed to address them due to an internal mandate to keep costs down.
The bank failed to monitor 92 percent of its transaction volume over a six-year period, which amounted to $18.3 trillion during that period, according to the DoJ. Three money laundering networks jointly transferred more than $670 million through the bank, authorities said.
TD also ordered branches to stop filing internal reports on unusual transactions involving certain suspicious customers and allowed more than $5 billion in activity to occur in accounts it had already decided to close, prosecutors said.
Two units of Toronto-based TD, Canada’s second-largest bank by assets, pleaded guilty Thursday to conspiring to fail to maintain an anti-money laundering program, failing to file accurate currency transaction reports and conspiring to launder money, as well as other counts.
Shares fell more than 5 percent in afternoon trading on Thursday.
“TD Bank created an environment where financial crime could flourish,” U.S. Attorney General Merrick Garland said at a news conference announcing the resolution. “By making its services easy for criminals, it became one.”
The deal with the DoJ includes the largest fine ever imposed under the U.S. Bank Secrecy Act, which requires banks to guard against using the financial system to facilitate criminal activity.
“Every bank compliance officer in America should view today’s charges as a case study of what not to do,” said Lisa Monaco, US deputy attorney general.
“This is a difficult chapter in the history of our bank,” Bharat Masrani, who had already announced plans to step down as TD CEO next year, said in a statement. “These failures occurred under my watch as CEO and I apologize to all our stakeholders.”
The bank faces a mix of criminal and civil penalties imposed by the DoJ, the Office of the Comptroller of the Monet, the Federal Reserve and the U.S. Treasury Department. As part of the deal, TD has agreed to install an independent monitor for four years.
The DoJ has charged more than 20 people in connection with the case, including two TD employees. The investigation remains ongoing and Garland said “we expect future cases against individuals.”
TD’s “stunningly widespread failures allowed criminal proceeds to flow through the bank,” said Philip Sellinger, the U.S. attorney for the District of New Jersey, pointing to Da Ying Sze, an individual known as David, who through the lender than laundered $470 million. He brazenly dumped wads of cash at TD counters almost daily and bribed the bank’s employees with more than $57,000 in gift cards, Sellinger added.
The guilty plea follows three related cases in which TD bank employees were accused of taking bribes to open accounts for shell companies and issuing dozens of debit cards linked to the accounts. Prosecutors identified the bank in court filings as Financial Institution-A or Financial Institution No. 1. The debit cards were transported to Colombia, where they were used to withdraw money from ATMs.
The TD fine is one of the largest imposed by the US on a financial institution in the past decade, including a $9 billion fine in 2014 on France’s BNP Paribas for alleged sanctions violations and a $4.3 fine billion last year for cryptocurrency exchanges. Binance.
The settlement caps a challenging 18 months for TD, during which time it had to scrap a planned $13.4 billion takeover of US lender First Horizon and announce a new CEO who will take over next year.
The lender, known for its bright green logo and for sponsoring the arena of the Boston Celtics, the reigning National Basketball Association champions, had already set aside $2.6 billion in response to the investigation.