TD Bank Group (NYSE: TD) announced that, following “several years” of active cooperation and engagement with authorities and regulators, it has reached a “resolution” of previously disclosed investigations related to its U.S. Bank Secrecy Act (BSA) as well as the Anti-Money Laundering (AML) compliance programs.
The Bank and certain of its U.S. subsidiaries have “consented to orders” with the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board, as well as the Financial Crimes Enforcement Network (FinCEN) and reportedly entered into “plea agreements” with the Department of Justice, Criminal Division, Money Laundering and Asset Recovery Section as well as the United States Attorney’s Office for the District of New Jersey.
Details of the resolution include:
- A total payment of approximately US$3.09 billion, largely covered by previous provisions of US$3.05 billion.
- Requirements to remediate the Bank’s U.S. AML program, broadly aligned to its existing remediation program, which is progressing steadily under the direction of its new U.S. AML leadership team.
- Requirement to prioritize the funding and staffing of the remediation, which is already in place.
- Formal oversight of the AML remediation through a Monitorship.
As noted in the update, the total assets of TD’s two U.S. banking subsidiaries (TD Bank, NA and TD Bank USA, NA) “cannot exceed $434 billion (total assets as at September 30, 2024); the limitation does not apply to TD Securities, or any of the Bank’s Canadian or other global businesses.”
The U.S. Bank is subject to “more stringent approval processes” for new bank products, services, markets, and stores to ensure the AML risk of new initiatives is appropriately considered and mitigated.
Plans are in place to address the requirements and limitations “contained in the consent orders, including adjustments” to the Bank’s U.S. balance sheet.
These actions will provide the asset capacity required to serve and support U.S. customers’ financial needs “without interruption, now and into the future.”
TD now claims that has the financial strength, stability, and operational flexibility to deliver the required U.S. AML remediation program, continue to “serve the financial needs” of its more than ten million U.S. customers, and invest to strengthen the business.
The banking institution said that it has “actively cooperated” in “good faith” with regulators and the Department of Justice throughout their investigations and continues to assist in the prosecution of the criminals who allegedly “leveraged its AML program weaknesses, including five of its store-level employees.”
A multi-year effort is needed to implement a “strong, effective, and sustainable” AML program. Work is underway, and progress to date includes:
- Overhauled AML program leadership and talent, including the appointment of new U.S. Head of Financial Crime Risk Management and BSA/AML Officer, with proven leadership and experience. Added 40 new leaders and over 700 new AML specialists with experience and qualifications in money laundering prevention, financial crimes, and AML remediation.
- Strengthened oversight structure and accountability across all three lines of defense, starting at the front lines and carrying through to risk management and audit teams.
- Formed a committee at the U.S. boards for AML / BSA oversight.
- Introduced various standards, processes, and stronger bank-wide training to better prevent, detect and measure financial crime risk, and “improve escalation and decision-making.”
- Deployed data-driven tech solutions with “stronger” detection and data management, analytics, and modelling capabilities; additional work underway in order to “build long-term sustainable risk mitigation.”
TD Bank concluded that it is now more committed to the “critical work effort” ahead and has mobilized the required “resources” in order to deliver its long-term U.S. AML remediation program.