TD Bank under Fire: Record Fine in Money Laundering Scandal

The financial market is in turmoil after TD Bank pleaded guilty to violations of anti-money laundering regulations in the United States and agreed to pay a record fine of three billion dollars. This penalty is the largest money laundering fine ever imposed on a bank by U.S. authorities, surpassing the nearly two billion dollars that HSBC had to pay in 2014 for similar offenses. As part of the settlement, the U.S. subsidiary of the Canadian bank has also agreed to keep its asset size below the current limit of 370 billion dollars as long as this capital freeze is in effect. This is the first time since the fake accounts scandal at Wells Fargo in 2018 that such a limit has been imposed on a bank. Michael Hsu, acting Comptroller of the Currency, stated that this coordinated and comprehensive action aims to ensure that the bank develops appropriate controls that match its risk profile. The charges followed a comprehensive investigation that revealed TD Bank had inadequate anti-money laundering measures. This allowed Chinese drug cartels to launder funds derived from the sale of fentanyl. Reportedly, these criminal networks bribed bank employees in branches in New York and New Jersey, enabling hundreds of millions of dollars to be laundered. TD Bank's settlement involves various regulatory authorities, including the Department of Justice, FinCEN, the Federal Reserve, and the OCC. TD Bank CEO Bharat Masrani stated in August that they are aware of the seriousness of the deficiencies in the U.S. AML program. Building perfect controls is of utmost importance to him and the company's leadership. Masrani has announced his resignation effective April. TD Bank's stock price has recovered after an initial drop and has risen by about 6%, last trading at $59.88 in New York. TD Bank has not yet commented upon request.