Feds slap TD Bank with $3.1 billion in fines for fentanyl money laundering and terrorist financing

TD Bank today pleaded guilty and agreed to pay more than $1.8 billion in penalties to resolve the Department of Justice’s investigation into violations of the Bank Secrecy Act (BSA) and non-compliance with anti-money laundering rules. Separately, the Financial Crimes Enforcement Network fined the Canadian banking giant’s New Jersey branch $1.3 billion for violations.

At a press event this afternoon, US Attorney General Merrick Garland said TD Bank was the largest bank in US history to plead guilty to Bank Secrecy Act failures and the first bank in history to plead guilty of conspiracy to commit money laundering. “By making his services convenient for criminals, he became one,” he said.

A FinCEN statement called the $1.3 billion settlement “the largest penalty against a depository institution in the history of the US Treasury and FinCEN.” From January 2014 to October 2023, TD Bank had “long-term, pervasive and systemic deficiencies in its U.S. anti-money laundering policies, procedures and controls,” according to the Justice Department’s statement, “but failed to take appropriate remedial measures”.

Executives at TD Bank applied a budget mandate, referred to internally as the “fixed cost paradigm,” which mandates that TD Bank’s budget not grow year-over-year, despite significant increases in profits and risk profile over the same period. Although TD Bank maintained elements of an AML program that appeared adequate on paper, regulators say fundamental and pervasive flaws in its AML program made TD Bank an “easy target” for financial criminals.

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 DOJ statement, these failures made it “convenient” for criminals, allowing three money laundering rings to collectively move more than $670 million through TD Bank accounts between 2019 and 2023. From January 2018 to February 2021, a money laundering ring processed more than $470 million through the bank through large cash deposits into nominee accounts.

As part of the settlement, according to FinCEN’s statement, TD Bank admitted that it willfully failed to implement and maintain an AML program that met the minimum requirements of the BSA and FinCEN’s implementing regulations. FinCEN says its investigation showed TD Bank knew its anti-money laundering program was deficient. Among other failures, TD Bank processed transactions on Venmo and Zelle that were “indicative of human trafficking” and, as a result of the deficiencies, “failed to identify and timely report these transactions” to the regulator.

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“The vast majority of financial institutions have worked with FinCEN to protect the integrity of the American financial system. TD Bank has done the opposite,” Deputy Treasury Secretary Wally Adeyemo said in the statement. “From fentanyl and narcotics trafficking to terrorist financing and human trafficking, TD Bank’s chronic failures have provided fertile ground for a range of illicit activities to penetrate our financial system.”

This story was originally featured on Fortune.com