TD Bank’s recent $3 billion penalty over money laundering lapses has raised questions about its connections to two unnamed cryptocurrency firms operating in Colombia and the United Kingdom.
The settlement involves TD Bank’s U.S. operations and includes limitations on the bank’s future growth due to lapses in anti-money laundering (AML) oversight.
According to the Financial Crimes Enforcement Network (FinCEN), over $1 billion of TD Bank’s transfer volume during the relevant period was linked to a customer group, referred to as “Customer Group C.”
This group claimed to be involved in sales finance and real estate industries but primarily facilitated cryptocurrency-related transactions. The group received more than 90% of its incoming funds from a UK-based cryptocurrency exchange, while more than 60% of its outgoing transactions were wired to a Colombian financial institution offering virtual asset services.
FinCEN’s report highlights that Customer Group C conducted an average of $100 million in monthly wire transfers, most of which involved apparent third-party cryptocurrency trading in high-risk jurisdictions, including Colombia, China, and countries in the Middle East. These transactions raised concerns due to massive deviations from the customer’s onboarding documentation.
TD Bank’s crypto transactions under scrutiny
During the period in question, TD Bank processed over $650 million in transfers for Customer Group C, originating from an international cryptocurrency exchange. Despite the unknown origins of these funds, the bank continued to process transactions, facilitating over $420 million in wires to a financial institution in Colombia that provides cryptocurrency services.
TD Bank previously engaged in the cryptocurrency market through its acquisition of TD Cowen, an independent investment bank that launched Cowen Digital in March 2022. The unit provided institutional clients with exposure to the crypto market, offering access to assets such as Bitcoin and Ether. However, Cowen Digital was shut down in June 2023, just three months after TD Bank completed its $1.3 billion acquisition of Cowen.
The closure of TD Cowen’s crypto division came amid several high-profile crypto company collapses in 2022 and ongoing banking and regulatory challenges in the U.S. in 2023.
