Attorney General Merrick Garland speaks during a news conference to announce that TD Bank will pay … [+]
Recently TD Bank pled guilty to both civil and criminal charges including conspiring to violate the Bank Secrecy Act related to money laundering. As a condition of the settlement, TD Bank will pay a $1.8 billion criminal penalty which when added to the civil fines brings the total to $3 billion dollars that the bank will pay to settle these charges.
TD Bank is the biggest bank to plead guilty to Bank Secrecy Act violations. The Bank Secrecy Act which was enacted in 1970 to combat money laundering requires banks to establish and maintain programs that guard against money laundering. White collar crime and street crime as well as terrorist groups and corrupt politicians all have a need to distance themselves from the source of their ill-gotten money and the enforcement of anti-money laundering laws can go a long way toward reducing these crimes.
TD Bank’s settlement also requires TD Bank to fundamentally restructure its anti-money laundering compliance programs including providing for an independent compliance monitor for four years.
The Justice Department is also prosecuting two dozen people for their involvement in money laundering schemes that moved more than $670 million in illicit funds through TD Bank along with two minor level TD Bank employees for their involvement in the money laundering schemes.
In addition, the settlement also requires TD Bank to cooperate in full with the continuing investigation of the Justice Department into the activities of TD Bank’s officers, directors and employees in regard to the money laundering violations that occurred at the bank between January 2014 to October 2023 during which time TD Bank failed to monitor $18.3 trillion dollars of questionable customer activity.
In September, the bank’s President and CEO Bharat Masrani announced he will be retiring in April of 2025. No charges have been brought at this time against Masrani and if history is followed, none will be filed. The sword of Damocles hanging over the bank should it fail to cooperate fully with the Justice Department’s further investigations of its officers, directors and employees is the threat of additional criminal charges that could be brought against the bank with the facts as admitted to in the Consent Decree able to be used as evidence against the bank.
Attorney General Merrick Garland, commenting on one particular drug dealer who he referred to as “David” who laundered money through TD Bank said, “David had attempted to launder money through numerous financial institutions. But he found that TD Bank had the most permissive policies and procedure and chose to launder most of his funds there. He also bribed TD Bank employees with more than $57,000 in gift cards in furtherance of his scheme. David’s illegal conduct was obvious to say the least. On more than one occasion, he deposited more than $1 million in cash in a single day. He then immediately moved the funds out of the bank using official bank checks and wire transfers.”
Further commenting on David’s activities with the bank, Garland said in a press conference, “In February of 2023, 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.’”
Garland also mentioned TD Bank employees laughing at the bank’s slogan of America’s Most Convenient Bank” during his press conference saying “Employees consistently joked on the bank’s instant messaging platform about the bank’s motto, ‘America’s Most Convenient Bank.’ They linked it to the bank’s approach to combatting money laundering. For example, a compliance employee asked a colleague why ‘all the really awful ones bank here lol’ The colleague replied: ‘because we are convenient.’”
This is not the first time that TD Bank has run afoul of violating money laundering laws and regulations. In 2013 the bank paid $52.5 million to settle charges related to its laundering funds for convicted Ponzi schemer Scott Rothstein. In that settlement it was recognized that TD Bank’s internal controls were not sufficient to detect and prevent money laundering.
The history of law enforcement actions against big banks such as TD Bank have resulted in large fines such as, in 2012 when HSBC was fined $1.9 billion for laundering money for drug cartels, terrorist organizations and sanctioned countries such as Iran and North Korea. However, no individual banker was charged. Whether the Justice Department’s continuing investigation of officers, directors and employees of TD Bank will result in actual people rather than just the banks themselves being criminally charged for these crimes remains to be seen. Until that happens, however, there is no reason to think that banks will not continue to find money laundering good business.