The Feds fine TD Bank $3.1 billion for money laundering related to fentanyl trafficking and terrorist financing

At a press event this afternoon, U.S. Attorney General Merrick Garland said TD Bank was the largest bank in U.S. history to plead guilty to violations of the Bank Secrecy Act and the first bank in history to plead guilty to conspiracy to launder money acquaintance. “By making its services convenient for criminals, it has become one,” he said.

A statement from FinCEN called the $1.3 billion settlement “the largest penalty against a depository institution in the history of the U.S. Treasury and FinCEN.” From January 2014 to October 2023, TD Bank “exhibited long-standing, widespread and systemic deficiencies in its U.S. AML policies, procedures and controls but failed to take appropriate remedial action,” according to the Justice Department’s statement.

TD Bank executives enforced a budget mandate, internally referred to as the “flat-cost paradigm,” which mandated that TD Bank’s budget not increase year-over-year, even though its profits and risk profile increased significantly over the same period. Although TD Bank maintained elements of an AML program that appeared adequate on paper, regulators say fundamental and widespread deficiencies in its AML program made TD Bank an “easy target” for perpetrators of financial crimes.

This resulted in approximately $18.3 trillion in transaction activity from January 1, 2018 to April 12, 2024, which was not monitored, according to the statement. According to employees cited in the Justice Department’s statement, these mistakes made it “convenient” for criminals as three money laundering networks were able to collectively transfer more than $670 million through TD Bank accounts between 2019 and 2023. From January 2018 to February 2021, a money laundering network processed more than $470 million through the bank through large cash deposits into nominee accounts.

As part of the settlement, TD Bank admitted that it willfully failed to implement and maintain an AML program that complied with the BSA’s minimum requirements and FinCEN’s implementing rules, according to the FinCEN statement. According to FinCEN, the investigation revealed that TD Bank knew its AML program had deficiencies. Among other things, TD Bank processed transactions on Venmo and Zelle that were “indicative of human trafficking,” and due to the deficiencies, it “failed to identify and timely report these transactions to regulators.”

“The vast majority of financial institutions have partnered with FinCEN to protect the integrity of the U.S. financial system. TD Bank did the opposite,” Deputy Treasury Secretary Wally Adeyemo said in the statement. “From fentanyl and drug trafficking to terrorist financing and human trafficking, TD Bank’s chronic failures provided fertile ground for a variety of illegal activities to penetrate our financial system.”