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FORWARDING FROM THE FINANCIAL CRIMES ENFORCEMENT NETWORK: FINCEN ASSESSES RECORD
$1.3 BILLION PENALTY AGAINST TD BANK

U.S. Department of the Treasury sent this bulletin at 10/10/2024 01:30 PM EDT


U.S. Department of the Treasury

Office of Public Affairs

 

Press Release:             FOR IMMEDIATE RELEASE

October 10, 2024

 

Contact:                      Treasury Public Affairs; Press@Treasury.gov       
     

FORWARDING FROM THE FINANCIAL CRIMES ENFORCEMENT NETWORK

FinCEN Assesses Record $1.3 Billion Penalty against TD Bank

WASHINGTON — The U.S. Department of the Treasury’s Financial Crimes Enforcement
Network (FinCEN) assessed a record $1.3 billion penalty against TD Bank, N.A.
and TD Bank USA, N.A. (collectively, TD Bank, or the Bank) for violations of the
Bank Secrecy Act (BSA), the primary U.S. anti-money laundering (AML) law that
safeguards the financial system from illicit use. TD Bank is among the largest
banks in the United States.

FinCEN’s $1.3 billion settlement is the largest penalty against a depository
institution in U.S. Treasury and FinCEN history. FinCEN’s action also imposes a
four-year independent monitorship to oversee TD Bank’s required remediation.

“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,” said Deputy Secretary of
the Treasury Wally Adeyemo. “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.”

“For over a decade, TD Bank allowed its AML program to languish, making TD Bank
a target for illicit actors—including its own employees,” said FinCEN Director
Andrea Gacki. “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.”

As part of the settlement, TD Bank admits that it willfully failed to implement
and maintain an AML program that met the minimum requirements of the BSA and
FinCEN’s implementing regulations. FinCEN’s investigation revealed that TD Bank
knew that its AML program was neither appropriately designed nor adequately
resourced to mitigate the actual illicit finance risks that it faced on multiple
fronts. Among other failures, TD Bank’s processing of peer-to-peer transactions
(e.g., Venmo and Zelle), including transactions indicative of human trafficking,
was insufficient, and as a result, TD Bank failed to identify and timely report
these transactions to FinCEN. TD Bank also allowed significant backlogs of
potentially suspicious activity to persist, thereby depriving law enforcement of
necessary information. TD Bank knew that it was the subject of significant
funnel account activity involving high-risk countries yet failed to take timely
action to address this substantial risk.

TD Bank also failed to timely detect suspicious activity involving its own
employees. For example, in 2021, a TD Bank employee facilitated the laundering
of narcotics proceeds in exchange for bribes. This employee opened numerous
accounts, including for shell companies, that then engaged in millions of
dollars’ worth of funnel account activity in a high-risk jurisdiction where TD
Bank maintained no operations. TD Bank knew that this type of activity was not
subject to appropriate controls and failed to mitigate this glaring risk.

As a result of these failures, TD Bank allowed trillions of dollars in
transactions annually to go unmonitored for potentially suspicious activity that
would require reporting to FinCEN. Specifically, during the time period covered
by the Consent Order, TD Bank willfully failed to file Suspicious Activity
Reports (SARs) on thousands of suspicious transactions—totaling approximately
$1.5 billion. Additionally, TD Bank’s Currency Transaction Reports (CTRs) of
large cash transactions were often delayed, and, in some instances, misleading
to law enforcement.

TD Bank failed to properly limit or report suspicious transactions and cash
activity that included substantial criminal activity, as further detailed in the
Consent Order. For example, from 2017 to 2021, TD Bank facilitated over $400
million in transactions for Da Ying Sze (Sze), who pled guilty to money
laundering in 2022 for his role in conspiring to hide proceeds of narcotics
trafficking. Sze conducted most of these transactions in large sums of cash
(often in bags that Sze brought into TD Bank branches), yet the Bank failed to
timely limit or restrict Sze’s activity. TD Bank failed to timely file SARs on a
substantial portion of this activity and also failed to identify Sze in more
than 500 CTRs totaling more than $400 million, which hindered FinCEN and law
enforcement.

TD Bank has agreed to engage an independent consultant, who, under the auspices
of FinCEN’s monitor, would conduct a historical analysis of TD Bank’s
transaction data, often referred to as a “SAR lookback,” to remediate the SAR
filings that TD Bank missed due to its extensive control gaps. TD Bank has also
agreed that the monitor will oversee an independent, end-to-end review of its
AML Program. For the first time, FinCEN is imposing accountability and data
governance reviews. The accountability review will independently assess the
involvement or failure to escalate by TD Bank personnel in conjunction with
certain conduct described in the Consent Order’s Statement of Facts. The
accountability review will provide corresponding recommendations to the Bank,
including recommendations related to the culture of compliance at TD Bank. The
data governance review will help to ensure that TD Bank identifies and fixes the
root causes of many gaps in its AML program.

The Department of Justice, the Office of the Comptroller of the Currency, and
the Board of Governors of the Federal Reserve System will also announce
settlements in parallel investigations today.

FinCEN’s Enforcement and Compliance Division is responsible for investigating
serious violations of the BSA. For additional information regarding the facts
and circumstances associated with this enforcement action, including the
specific BSA violations and their underlying causes, please see the Consent
Order between FinCEN and TD Bank.

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