TD Bank Pays Record-Setting $3.1 Billion For Money Laundering And Bank Secrecy Act Violations

Last Thursday (October 10), the Department of Justice (DOJ) announced that TD Bank pleaded guilty and agreed to pay roughly $1.8 billion in penalties to resolve DOJ charges of money laundering and other violations of the Bank Secrecy Act (BSA). This is on top of the roughly $1.3 billion the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) assessed TD Bank for the same violations.

The $3.1 billion combined sanction is record-setting in multiple ways: It is the largest penalty ever imposed under the BSA, is the largest against a depository institution in US Treasury and FinCEN history, TD Bank is now the largest bank in US history to plead guilty to BSA program failures, and the first US bank to plead guilty to conspiracy to commit money laundering.

At the center of the charges were TD Bank’s long-standing and pervasive deficiencies in its anti-money laundering (AML) policies and controls. According to the government, while the bank “maintained elements of an AML program that appeared adequate on paper, fundamental, widespread flaws in its AML program made TD Bank an ‘easy target’ for perpetrators of financial crime.” The government specifically pointed to the bank’s transaction monitoring program, which is central to properly identifying suspicious activities. The government stated the program was “effectively static,” and failed “to address known, glaring deficiencies; emerging money laundering risks; or TD Bank’s new products and services.”

Per DOJ, TD Bank’s widespread compliance failures resulted in 92% of the bank’s total transaction volume—amounting to $18.3 trillion of transaction activity—going unmonitored for more than six years. TD Bank also implemented new products like Zelle without ensuring proper monitoring; ignored transactions involving high-risk countries; curtailed unusual transaction reports on suspicious customers; and permitted $5 billion of activity in closed accounts.

In the words of TD Bank’s own employees, these compliance failures made it “convenient” for criminals to transfer hundreds of millions of dollars in illicit proceeds through TD Bank accounts. DOJ provided three specific examples: (i) a money laundering network processing roughly $470 million through the bank, providing gift cards to bank employees who helped in the dirty work or looked the other way; (ii) a high-risk jewelry business moving nearly $120 million through shell accounts; and (iii) money laundering networks depositing and then quickly withdrawing tens of millions of dollars using ATMs in Colombia.

DOJ did not mince words in condemning TD Bank for its complicity in this illegal money laundering activity. Attorney General Merrick Garland was especially stark in his rebuke: “By making its services convenient for criminals, TD Bank became one. . . .  TD Bank chose profits over compliance with the law—a decision that is now costing the bank billions of dollars in penalties.”

Deputy Attorney General Lisa Monaco echoed this strong sentiment: “For years, TD Bank starved its compliance program of the resources needed to obey the law. Today’s historic guilty plea . . . offers an unmistakable lesson: crime doesn’t pay—and neither does flouting compliance.” She urged compliance officials across the country to take heed of TD Bank’s failings and make sure they keep their own house in proper AML order:

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.

DOJ Criminal Chief Nicole M. Argentieri issued a similar admonition: “US financial institutions are the first line of defense against money laundering and illicit finance. When they participate in crime rather than prevent it, we will not hesitate to hold them accountable to the fullest extent of the law.”

Deputy Secretary of the Treasury Wally Adeyemo added to the chorus of criticism, highlighting just how serious TD Bank’s violations were and the grave ramifications they posed: “From fentanyl and narcotics trafficking, to terrorist financing and human trafficking, TD Bank’s chronic failures provided fertile ground for a host of illicit activity to penetrate our financial system.” And FinCEN Director Andrea Gacki added: “[t]his historic action should serve as a powerful reminder that we will not tolerate financial institutions who flagrantly violate their obligation to safeguard our financial system from criminal activity.”

Financial institutions should be especially careful in their AML and BSA compliance efforts because this landmark settlement is only the latest indication that going after violations in this space is a top enforcement priority for FinCEN and DOJ. Notably, both agencies have recently launched whistleblower programs offering hefty rewards to whistleblowers who come forward with information leading to a successful AML enforcement action.

Congress passed the FinCEN program—known as the AML Whistleblower Program—in 2021, which provides whistleblowers up to 30% of monetary sanctions the government imposes for AML or sanctions violations based on the information the whistleblower provides. And this past August, DOJ unveiled its Corporate Whistleblower Rewards Pilot Program which, among other things, covers financial institution crimes that fall outside of the FinCEN program. DOJ has made it clear that money laundering and anti-money laundering compliance violations are two of the main focuses of the Pilot Program.

We do not know whether any whistleblowers were involved in the TD Bank enforcement action. And we may never know given the government’s commitment to maintaining the strict confidentiality of its whistleblowers. But it certainly is possible given the timing of the FinCEN program and the powerful financial incentives it provides AML whistleblowers to step forward. Either way, this historic penalty will no doubt serve as a catalyst for AML whistleblowers to come forward. The government has made it very clear it wants to hear from them and is willing reward them handsomely.

So, if you have information concerning potential AML and BSA violations or general questions about what it means to be a whistleblower under the various government programs, please do not hesitate to contact us. We will put you in touch with an experienced member of our whistleblower team for a free and confidential consult. Who knows, you might be the whistleblower who leads the government to the next big AML win.