TD Bank Group Announces Resolution of AML Investigations
By Dominic Sow · 11 October 2024
TD Bank Group ("TD" or the "Bank") (TSX: TD) (NYSE: TD) today announced that, following several years of active cooperation and engagement with authorities and regulators, it has reached a resolution of previously disclosed investigations related to its U.S. Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance programs.
The Bank and certain of its U.S. subsidiaries have consented to orders with the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board, and the Financial Crimes Enforcement Network (FinCEN) and entered into plea agreements with the Department of Justice, Criminal Division, Money Laundering and Asset Recovery Section and the United States Attorney's Office for the District of New Jersey.
Details of the resolution include:
- A total payment of approximately US$3.09 billion, largely covered by previous provisions of US$3.05 billion.
- Requirements to remediate the Bank's U.S. AML program, broadly aligned to its existing remediation program, which is progressing steadily under the direction of its new U.S. AML leadership team.
- Requirement to prioritize the funding and staffing of the remediation, which is already in place.
- Formal oversight of the AML remediation through a Monitorship.
- The total assets of TD's two U.S. banking subsidiaries (TD Bank, NA and TD Bank USA, NA) ("US Bank") cannot exceed US$434 billion (total assets as at September 30, 2024); the limitation does not apply to TD Securities, or any of the Bank's Canadian or other global businesses.
- The U.S. Bank is subject to more stringent approval processes for new bank products, services, markets, and stores to ensure the AML risk of new initiatives is appropriately considered and mitigated.
Plans are in place to address the requirements and limitations contained in the consent orders, including adjustments to the Bank's U.S. balance sheet. These actions will provide the asset capacity required to serve and support U.S. customers' financial needs without interruption, now and into the future.
TD has the financial strength, stability, and operational flexibility to deliver the required U.S. AML remediation program, continue to serve the financial needs of its more than ten million U.S. customers, and invest to strengthen the business.
"We have taken full responsibility for the failures of our U.S. AML program and are making the investments, changes and enhancements required to deliver on our commitments. 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," said Bharat Masrani, Group President and Chief Executive Officer, TD Bank Group. "I want to thank our colleagues, who continue to demonstrate their dedication and who play an important role in preventing criminal activity."
The Bank has actively cooperated in good faith with regulators and the Department of Justice throughout their investigations and continues to assist in the prosecution of the criminals who leveraged its AML program weaknesses, including five of its store-level employees.
"Money laundering is a serious global threat, and our U.S. operation did not maintain an adequate AML program to thwart criminal activity. The Board has and continues to take action to address these failures and hold those responsible accountable. We have appointed new leaders across our U.S. operations, overhauled our U.S. AML team, and prioritized investments to drive the required changes," said Alan MacGibbon, Chair of the Board, TD Bank Group. "Enhancing our program and meeting our obligations today and into the future is the number one priority of the Board and management."
U.S. AML PROGRAM REMEDIATION
"Criminals were able to exploit our systems and our U.S. AML program did not deliver. We continue to work with purpose, focus and urgency to remediate our AML program and earn back the trust of our regulators and other stakeholders. We are committed to working productively with the Monitorship to build a sustainable AML program and meet our obligations under the terms of the resolution," said Leo Salom, President and Chief Executive Officer, TD Bank, America's Most Convenient Bank. "Our U.S. operation is strong, and we will continue to serve the needs of the 10 million households and businesses in the U.S. who rely on us for their financial goals."
A significant, multi-year effort is required to implement a strong, effective, and sustainable AML program. Work is underway, and progress to date includes:
- Overhauled AML program leadership and talent, including the appointment of new U.S. Head of Financial Crime Risk Management and BSA/AML Officer, with proven leadership and experience. Added 40 new leaders and over 700 new AML specialists with experience and qualifications in money laundering prevention, financial crimes, and AML remediation.
- Strengthened oversight structure and accountability across all three lines of defense, starting at the front lines and carrying through to risk management and audit teams. Established a dedicated committee at the U.S. boards for AML / BSA oversight.
- Introduced new standards, processes, and stronger bank-wide training to better prevent, detect and measure financial crime risk, and improve escalation and decision-making.
- Deployed new data-driven technology solutions with stronger detection and data management, analytics, and modelling capabilities; additional work underway to build long-term sustainable risk mitigation.
The Bank is committed to the critical work effort ahead and has mobilized the required resources to deliver its long-term U.S. AML remediation program. Companies in this story: TD Bank Group
People in this story: Leo Salom, Bharat Masrani