The U.S. government and prosecutors are going to fine Canada’s TD Bank a lot of money—about $3 billion—as part of a settlement over claims that the bank did not properly monitor actions related to laundering money, especially those related to drug cartels. The Wall Street Journal wrote about this story on Wednesday.
The bank’s U.S. branch is likely to plead guilty to the charges as early as Thursday, after multiple officials thoroughly looked into their accounts. This plea is part of a larger settlement agreement that aims to address the claims that the bank did not follow proper anti-money laundering procedures, which reportedly made illegal activities easier, including those involving drug cartels. So far, TD Bank hasn’t said anything public about the situation.
TD Bank’s settlement
The Department of Justice (DOJ), the Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency (OCC), and the Federal Reserve are all part of the deal. Every one of these groups is supposed to do their part to make sure the deal is followed. As it stands, the DOJ will allegedly get the biggest share of the fines, around $1.8 billion. As part of its job to keep an eye on and make sure that anti-money laundering rules are followed, FinCEN is going to get $1.3 billion.
In the U.S., TD Bank will have to follow more rules because of the deal. In the United States, the OCC is the bank’s main regulator, so it is likely that the bank will limit its ability to grow its assets in the country. The goal of this move is to stop the bank from growing until it can show that all of its operations are in line with U.S. law, especially when it comes to stopping money laundering.
The deal also includes rules that will make it easier to keep an eye on what TD Bank does going forward. It is assumed that both the DOJ and FinCEN will hire outside watchdogs to make sure that the bank follows the settlement terms and improves its internal compliance systems.
The Wall Street Journal says that the FinCEN monitor will likely be in place for four years. During that time, the bank’s actions will be closely watched to make sure they don’t break anti-money laundering rules again.
The seriousness of the charges against the bank is shown by this amount of oversight. Money laundering, especially when it involves drug cartels, is very bad for the financial system. The U.S. government wants to show that people who don’t follow the rules will not be allowed.
Independent monitors are often appointed as part of these kinds of settlements. Their job is to give officials confidence that the institution is doing what it needs to do to fix any problems with its compliance systems.
There has been interest in the settlement, but the DOJ, FinCEN, and OCC have all declined to speak at this time.
Bharat Masrani, CEO of TD Bank, did say something in a statement about the penalties and the investigation’s outcome. “This is a rough time in the history of our bank.” It was my job as CEO to let these mistakes happen, and I’m sorry to everyone who was affected.
We are fully responsible for the problems with our US anti-money laundering program and are making the investments, changes, and improvements we need to keep our promises.
Regulators in the U.S. are paying more attention to how financial companies help stop illegal money flows at the same time that TD Bank is being charged. Criminal groups may be able to move large amounts of money through the banking system without being caught if strange transactions are not reported.
This lets these groups keep doing illegal things. The bank got one of the biggest fines ever given to a Canadian financial institution because it was said to have failed to properly watch transactions involving drug cartels.
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