Last week, TD Bank N.A. (TDBNA) and its parent company TD Bank US Holding Company (TDBUSH) pleaded guilty to felony charges of conspiring to commit money laundering and violating the Bank Secrecy Act (BSA) and agreed to pay more than $1.8 billion in penalties to the Justice Department and $1.3 billion to the Financial Crimes Enforcement Network (FinCEN). In addition, the Office of the Comptroller of Currency as well as the Federal Reserve assessed civil penalties of $450 million and $123 million, of which will be credited against the DOJ and FinCEN amounts. Also, OCC will be placing TD’s two U.S. banking units TDBNA and TDBUSH under an asset cap that will limit their combined growth to no more than $434 billion in total assets until it remediates its anti-money laundering (AML) compliance.

Background on the Bank Secrecy Act

Under the BSA, financial institutions are required to establish AML practices that, among many things, perform customer due diligence such as verifying the identity of customers and conducting ongoing monitoring to identify and report any suspicious transactions. And where suspicious transactions may be occurring, financial institutions are required by the BSA to file Suspicious Activity Reports (SARs) with the Financial Crimes Enforcement Network (FinCEN). Thus, under the BSA, financial institutions are required to know to the best of their ability who they do business with and to report any suspicious activity to the FinCEN.

TD Bank’s Negligence

For nearly a decade, TD Bank failed to update its AML compliance program in accordance with the BSA to address known risks. Throughout this time, federal regulators and TD Bank’s own internal audit group repeatedly identified concerns about the bank’s transaction monitoring program, which is a key component of a sufficient AML program. Despite such notices, TD Bank failed to enhance its transaction monitoring program nor did it adapt to address known, glaring deficiencies, emerging money laundering risks, or the bank’s new products and services.

In prioritizing growth and convenience over following legal obligations, corrupt bank employees came to facilitate criminal networks’ laundering of hundreds of millions of dollars. From January 2018 to April 2024, 92% of the $18.3 trillion of transaction activity that flowed through TD Bank went unmonitored, enabling three money laundering networks to collectively transfer more than $670 million through TD Bank accounts between 2019 and 2023. And between 2018 and 2021, one money laundering network processed more than $470 million through the bank from large cash deposits into nominee accounts. In another scheme between 2021 and 2023, a high-risk jewelry business moved almost $120 million through shell accounts before TD Bank reported the activity. And in a third scheme, money laundering networks deposited funds in the U.S. and quickly withdrew those funds using ATMs in Colombia. Here, five TD Bank employees conspired with this network and issued ATM cards for the money launderers, ultimately conspiring in laundering around $39 million.

The Plea Agreement

Two dozen individuals, with two among them being bank insiders, were charged in these schemes. As part of TD Bank’s plea agreement, it will be required to continue cooperating in ongoing investigations of individuals involved in the scheme. Also, as part of the plea agreement, TD Bank agreed to pay $3.1 billion in penalties to the DOJ, the Federal Reserve, OCC, the U.S. Treasury Department, and FinCEN. The amount levied against TD Bank could have been more were it not for the bank’s strong cooperation with the DOJ in its investigation and ongoing remediation of its AML program, resulting in a 20% reduction.

The Role of Whistleblowers

When firms and financial institutions don’t uphold their end of anti-money laundering enforcement, not only are taxpayers harmed, but criminal enterprises and bad actors can continue their illicit activities unimpeded. Whistleblowers can play a crucial role in helping reign in this activity. Whistleblowers can be compliance officers, bookkeepers, auditors or anyone else with visibility into transactions. Under the Anti-Money Laundering Act, whistleblowers whose information leads to a successful enforcement action may be entitled to up to 30% in monetary awards of actions resulting in more than $1 million in monetary sanctions.

Baron & Budd Whistleblower Attorneys

Baron & Budd’s whistleblower representation team has more than 50 years of experience representing dozens of clients in government fraud cases. They have returned more than $6.0 billion to federal and state agencies with whistleblower recovery shares as high as 50%.

For more information, see What You Need to Know About Becoming a Whistleblower.