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TD Bank has agreed to pay the US government $3bn to settle charges that it failed to block criminal organisations from using the Canadian lender to launder hundreds of millions of dollars through its accounts.
The Department of Justice said TD had “long-term, pervasive and systemic deficiencies” in its anti-money laundering programme but did not remedy them because of an internal mandate to keep costs flat.
The bank failed to monitor 92 per cent of its transaction volume during a six-year period, amounting to $18.3tn during that time, according to the DoJ. Three money-laundering networks collectively transferred more than $670mn through the bank, authorities said.
TD also ordered branches to stop filing internal reports on unusual transactions involving certain suspicious customers, and permitted more than $5bn in activity to occur in accounts it had already decided to close, prosecutors said.
Two units of Toronto-based TD, Canada’s second-biggest bank by assets, on Thursday pleaded guilty to failing to maintain an anti-money laundering programme, failing to file accurate transaction reports and conspiring to launder money.
“TD Bank created an environment that allowed financial crime to flourish by making its services convenient for criminals. It became one today,” US attorney-general Merrick Garland said at a news conference announcing the resolution.
“This is a difficult chapter in our bank’s history,” Bharat Masrani, who had already announced plans to step down as TD’s chief executive next year, said in a statement. “These failures took place on my watch as CEO and I apologise to all our stakeholders.”
The guilty plea follows three related cases, in which TD bank employees, including a branch manager in New York, were accused of accepting bribes to open accounts for shell companies and issuing dozens of debit cards tied to the accounts. Prosecutors identified the bank as Financial Institution-A or Financial Institution No. 1 in court filings.
According to one of the indictments, drug cartels targeted TD branches in the New York City borough of Queens, bringing bags of cash to bank employees who deposited the money into the accounts. In all three cases, the debit cards were transported to Colombia, where they were used to withdraw money from cash machines in the South American country.
As part of the deal, TD has agreed to install an independent monitor for four years.
The TD fine is one of the largest penalties imposed by the US on a financial institution in the past 10 years, which have included a $9bn fine in 2014 on France’s BNP Paribas for alleged sanctions violations and a $4.3bn fine last year on cryptocurrency exchange Binance.
The settlement caps a challenging 18 months for TD, during which time it had to scrap a planned $13.4bn acquisition of US lender First Horizon and announced a new chief executive who is set to take over next year.
The lender, known for its bright green logo and for sponsoring the arena of the Boston Celtics, the reigning National Basketball Association champions, had already set aside $2.6bn in response to the investigation.
https://www.ft.com/content/4bc11e6d-ce71-4c64-af8d-4301c84fe6d1
