TD Bank’s U.S. unit has agreed to pay $3.09 billion in penalties and face growth restrictions following charges it failed to effectively monitor money laundering activities linked to drug cartels and Chinese criminal organizations. The settlement exposes flaws in federal anti-money-laundering (AML) systems related to international schemes by networks based in China.
Law-enforcement authorities working to counter threats posed by fentanyl have focused on networks of Chinese money-brokers and Mexican cartels that use the brokers to launder their criminal proceeds. The Wall Street Journal has reported that officials said these networks pioneered a trade-based method of laundering cash out of the U.S., and that investigations in recent years have also revealed they made extensive use of the U.S. banking system.
The Justice Department’s investigation into TD Bank’s AML practices, led by the U.S. Attorney’s Office in New Jersey, stems in part from a criminal case involving an operation that laundered at least $653 million in proceeds from illicit narcotics. In 2021, federal prosecutors unsealed a complaint charging Da Ying Sze, who went by “David,” with coordinating the money-laundering scheme. Sze pleaded guilty to charges related to the money-laundering conspiracy in 2022.
In some cases, prosecutors alleged that criminals bribed TD employees to facilitate the transactions. This revealed significant deficiencies in the bank's AML controls, allowing vast sums of illicit money to flow through its systems undetected.
"We recognize the seriousness of our U.S. AML program deficiencies, and the work required to meet our obligations and responsibilities is of paramount importance to me, our senior leaders, and our boards," said Bharat Masrani, CEO of TD Bank, ahead of his planned resignation.
TD Bank pled guilty to criminal charges and faces an asset cap that limits its growth in the U.S. The settlement, which includes $1.8 billion to the Department of Justice and $1.3 billion to the Financial Crimes Enforcement Network (FinCEN), will involve independent monitors to oversee TD Bank’s efforts for the next four years to ensure remediation of its deficiencies.
"TD continues to work constructively with our regulators and law enforcement towards resolution of our U.S. AML matters and looks forward to bringing additional clarity to our shareholders, clients and other stakeholders," concluded Masrani.
FinCEN, the Financial Crimes Enforcement Network, is a bureau of the U.S. Department of the Treasury to safeguard the financial system from illicit use, combat money laundering, and promote national security through the collection, analysis, and dissemination of financial intelligence.
