Toronto-Dominion Bank in the Whirlpool of Money Laundering: Billion-Dollar Fine and Growth Restriction

Toronto-Dominion Bank has agreed to pay nearly $3.1 billion in penalties and face a growth halt for its US retail banking activities. These drastic consequences follow an admission of guilt by the bank for failing to prevent money laundering by drug networks and other criminals. Two US units of the Canadian bank pleaded guilty before a federal judge in Newark, New Jersey, on Thursday. US Attorney General Merrick Garland sharply criticized the bank: "TD Bank chose profits over compliance — a decision now costing the company billions." The decision puts the US banking operations under substantial pressure, negatively impacting the stock price, which fell by 6.1%. A sophisticated money laundering system, involving funds being deposited in the US and withdrawn via ATMs in Colombia, cast further shadows over the bank. Court documents revealed that a manager even advised: "You should really shut this down LOL." Prosecutors accused the company of failing to adequately report suspicious activities for a decade. To pay the necessary fines, the bank even planned to sell shares in financial services provider Charles Schwab as part of a strategic restructuring. While the measures only affect the US activities, the Canadian and international businesses of the bank are not directly impacted. Nevertheless, analysts see a potential strategic realignment coming, as previous growth strategies may now falter.