TD Bank fined US$3B, faces U.S. asset cap in money laundering plea deal
Global News
The bank has pleaded guilty to U.S. criminal charges of conspiring to launder money and failing to maintain a compliant anti-money laundering program.
Two TD Bank units have pleaded guilty to U.S. criminal charges and agreed to pay $3 billion in combined penalties to resolve federal government probes into money laundering, U.S. authorities said on Thursday.
The plea deal includes imposition of an asset cap and other limitations to its business, authorities said. The bank has pleaded guilty to conspiring to launder money and conspiring to fail to file accurate reports or maintain a compliant anti-money laundering program, the Justice Department said.
The asset cap, imposed by the Office of the Comptroller of the Currency, is a rare step typically reserved for severe cases. It would deal a major blow to TD, which has sought to expand further in the U.S., which accounts for about a third of the bank’s income.
TD also agreed to pay $3 billion in combined penalties to U.S. banking regulators, the Justice Department and the Treasury Department’s Financial Crimes Enforcement Network.
The deal resolves investigations by the Justice Department, the Office of the Comptroller of the Currency and Treasury’s Financial Crimes Enforcement Network. It is also includes the imposition of independent monitoring.
An asset cap is “worst case scenario” for TD, said Cormark Securities analyst Lemar Persaud prior to details of the plea deal being announced. The bank has already set aside $3 billion for the fine.
Persaud drew a parallel with Wells Fargo, which has a $1.95 trillion asset cap in place following a fake accounts scandal, which has constrained its earnings. An asset cap would also constrain TD’s profits but to a lesser extent than it did for Wells Fargo, he said.
The TD probe has led to “significant underperformance of the stock and, we believe, the retirement of the current CEO Bharat Masrani,” Persaud said.
