(22 August 2024 – Canada) Toronto-Dominion Bank (TD), Canada’s second-largest bank, has set aside $2.6 billion to cover potential fines related to a U.S. federal investigation into its anti-money laundering (AML) program.
The total provisions connected to this probe have now reached approximately $3.57 billion, leading to a 4 percent drop in TD’s shares during pre-market trading.
The investigation by the U.S. Department of Justice centers on allegations that Chinese drug traffickers laundered at least $653 million through TD and other financial institutions, with TD being identified as “Financial Institution No. 1” in the scheme. Reports indicate that these traffickers allegedly bribed TD employees to facilitate illicit transactions. Although TD has not directly commented on these specific reports, CEO Bharat Masrani acknowledged significant failures in the bank’s ability to monitor and respond to suspicious activities, calling the situation “unacceptable” and emphasising the bank’s cooperation with authorities.
TD’s involvement in the U.S. market is substantial, with over 1,100 locations making it the seventh-largest U.S. bank by deposits and the tenth-largest by total assets. The ongoing probe highlights the challenges financial institutions face in adhering to the U.S. Bank Secrecy Act, which mandates strict AML compliance, including the Know Your Customer (KYC) guidelines. This case underscores the critical importance of robust AML programs in preventing money laundering and other financial crimes.