The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a record $1.3 billion fine to TD Bank for severe violations of the Bank Secrecy Act (BSA).
The penalty is the largest ever imposed on a U.S. depository institution, marking a significant step in the fight against money laundering. TD Bank admitted to willfully failing to implement a robust anti-money laundering (AML) program and maintain compliance with BSA regulations.
Transactions tied to human trafficking and other illicit activities
FinCEN’s investigation found that TD Bank’s AML program was under-resourced and poorly designed to address the risks the bank faced, particularly in the processing of peer-to-peer transactions through platforms like Venmo and Zelle. These gaps led to missed reporting of transactions tied to human trafficking and other illicit activities. Additionally, the bank allowed significant backlogs of unmonitored suspicious activity, depriving law enforcement of critical information.
Notably, TD Bank also failed to detect and report suspicious activity involving its own employees. In 2021, a TD Bank employee was found to have facilitated money laundering for narcotics traffickers in exchange for bribes. Despite knowledge of funnel account activities in high-risk jurisdictions, TD Bank did not act to mitigate these risks, allowing trillions of dollars in transactions to go unmonitored.
From 2017 to 2021, TD Bank processed over $400 million in transactions for Da Ying Sze, who was later convicted of money laundering. The bank failed to properly report over 500 Currency Transaction Reports (CTRs) connected to Sze’s activity.
As part of the settlement, TD Bank will undergo a four-year independent monitorship to oversee an extensive remediation process, including a historical review of its SAR filings. FinCEN has introduced new accountability measures, including reviews of TD Bank’s data governance and compliance culture.
“From fentanyl and narcotics trafficking, to terrorist financing and human trafficking”
Deputy Secretary of the Treasury Wally Adeyemo said: “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. 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. Our historic action represents a significant step in safeguarding our country and communities from criminal activity like fentanyl and human trafficking by requiring TD Bank to fix the vast deficiencies in its safeguards against money laundering. The Biden-Harris Administration is committed to taking action to keep our communities safe from the sort of behavior facilitated by illicit finance and enabled by TD Bank’s lax oversight, and we are making clear that financial institutions will face severe repercussions if they fail to maintain necessary safeguards.”
FinCEN Director Andrea Gacki, commented: “For over a decade, TD Bank allowed its AML program to languish, making TD Bank a target for illicit actors—including its own employees. The magnitude of FinCEN’s action is consistent with the harm that TD Bank’s failures caused. This 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.”
