U.S. Attorney for New Jersey Philip Sellinger said employees joked that TD Bank’s motto, “America’s most convenient bank,” meant that TD Bank was convenient for criminals. (Photo by New Jersey Monitor)
Federal authorities have slapped TD Bank with $3 billion in penalties and ordered federal oversight for its “staggering and pervasive money-laundering failures” that enabled international drug traffickers to launder more than $670 million through the nation’s 10th largest bank.
The bank had inadequate controls in place to detect money laundering and even facilitated it, with bank employees — including managers — accepting bribes and joking with their colleagues about enabling criminal activity, U.S. Attorney General Merrick B. Garland said during a Thursday news conference in Washington, D.C.
Bank officials pleaded guilty Thursday before U.S. District Judge Esther Salas in Newark to multiple felonies, including conspiring to violate the Bank Secrecy Act and commit money laundering, Garland said.
“Our laws dictate that the narcotics traffickers who flood our communities with deadly drugs cannot use American financial institutions to move their money, and our anti-money laundering laws dictate that a bank that willfully fails to protect against criminal schemes is also a criminal. That is what TD Bank was, because it failed to maintain an adequate anti-money laundering program between January 2014 and October 2023,” Garland said.
Over a six-year period from January 2018 through last April, TD Bank failed to monitor $18.3 trillion in customer activity, which allowed three money laundering networks — two in New Jersey and one in Puerto Rico — to transfer more than $670 million through TD Bank accounts, Garland said.
In one example given by Deputy Secretary of the Treasury Wally Adeyemo, bank employees filed false or misleading reports to hide more than $400 million in laundered money for traffickers selling fentanyl and other deadly drugs. One alleged trafficker alone gave bank employees at least $57,000 in gift cards as bribes, authorities said.
Every bank compliance official in America should be reviewing today’s charges as a case study of what not to do.
– U.S. Deputy Attorney General Lisa Monaco
U.S. Deputy Attorney General Lisa Monaco said TD Bank officials knew of their shortcomings in protecting against money laundering but failed repeatedly to act or properly fund the bank’s compliance program, even as profits rose.
“In 2013, federal regulators began penalizing the bank for the lack of money laundering controls. But as the light continued blinking red, TD Bank could only see green,” Monaco said. “Every bank compliance official in America should be reviewing today’s charges as a case study of what not to do, and every bank CEO and board member should be doing the same, because if the business case for compliance wasn’t clear before, it should be now.”
Garland and Philip Sellinger, the U.S. attorney for New Jersey, said bank employees even found humor in their lax controls.
“The motto ‘America’s most convenient bank’ was used as a joke among employees to describe TD Bank being convenient for criminals,” Sellinger said.
In August 2021, Garland said, one bank manager emailed another: “You guys really need to shut this down, lol.”
In a February 2021 exchange, after an alleged drug trafficker bought more than $1 million in official bank checks with cash in a single day, an employee asked a colleague: “How is that not money laundering?”
That staffer responded: “Oh, it 100% is.”
With its plea agreement Thursday, TD Bank became the largest bank in U.S. history to plead guilty to Bank Secrecy Act program failures and the first bank in history to plead guilty to conspiracy to commit money laundering, Garland said. The fines ordered are the largest ever under the Bank Secrecy Act and the first time the Justice Department has assessed a daily fine against a bank as part of the plea agreement, Garland said.
As part of its plea deal, bank officials agreed to forfeit $452 million, pay a $1.4 billion criminal fine as well as other civil penalties, overhaul the company’s compliance program, hire an independent monitor to oversee its compliance for three years, and report employee misconduct to federal authorities. Officials also agreed to growth limits so that the total assets of its U.S. subsidiaries cannot exceed $434 billion.
The Justice Department has prosecuted two dozen people for their involvement in the schemes, Garland said. Investigators identified five “bank insiders” who were involved, and two have been criminally charged, Garland said.
The investigation is ongoing, and the bank is expected to cooperate with investigators as a condition of its plea agreement.
“No one involved in TD Bank’s illegal conduct will be off limits. We will follow the evidence wherever it leads,” Garland said.
Bharat Masrani, group president and chief executive officer of Canada-based TD Bank Group, said the bank has “taken full responsibility for the failures” of its U.S. subsidiaries and is making the changes required. The bank has more than 10 million customers in the U.S., he noted.
“This is a difficult chapter in our Bank’s history. These failures took place on my watch as CEO and I apologize to all our stakeholders,” Masrani said in a statement.
Alan MacGibbon, board chair of TD Bank Group, said the company appointed new leaders across the bank’s U.S. operations.
“Money laundering is a serious global threat, and our U.S. operation did not maintain an adequate AML (anti-money laundering) program to thwart criminal activity,” MacGibbon said. “The Board has and continues to take action to address these failures and hold those responsible accountable.”
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