TD Bank, the 10th largest bank in the U.S., has agreed to pay over $3 billion in penalties for Bank Secrecy Act (BSA) violations assessed by the Financial Crimes Enforcement Network (FinCEN), the Department of Justice (DOJ), the OCC and the Federal Reserve. FinCEN’s $1.3 billion settlement is the largest penalty against a depository institution in U.S. Treasury and FinCEN history. 

According to the settlements, TD Bank failed to implement and maintain an adequate Anti-Money Laundering (AML) program. The bank’s insufficient processing of Venmo and Zelle transactions, which are indicative of human trafficking, resulted in the bank not identifying and reporting these transactions timely to the government.  

They also allowed enormous backlogs of potentially suspicious activity to persist, and not adequately report the suspicious activity. TD Bank understood it was part of activities involving high-risk countries but failed to take timely action to address this substantial risk. It also did not timely detect suspicious activity involving its own employees. The bank’s employees facilitated the laundering of narcotics proceeds in exchange for bribes, some in the form of gift cards.  

TD Bank failed to file Suspicious Activity Reports (SARs) on thousands of suspicious transactions totaling approximately $1.5 billion. It also delayed submitting Currency Transaction Reports (CTRs). 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 the bank’s branches, yet TD 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 failed to identify Sze in more than 500 CTRs totaling more than $400 million. 

The DOJ stated TD Bank willfully failed to monitor trillions of dollars of transactions, including those involving ACH transactions, checks, high-risk countries and peer-to-peer transactions, which allowed hundreds of millions of dollars from money laundering networks to flow through the bank, including for international drug traffickers. The DOJ shared that TD Bank was aware of these risks and failed to take steps to protect against them, including for two networks prosecuted in New Jersey and elsewhere, one that dumped piles of cash on the bank’s counters, and another allegedly withdrew amounts from ATMs 40 to 50 times higher than the daily limit for personal accounts. 

In one scheme, money laundering networks deposited funds in the U.S. and quickly withdrew those funds using ATMs in Colombia. Five TD Bank employees conspired with this network and issued dozens of ATM cards for the money launderers, ultimately conspiring in the laundering of approximately $39 million. Two bank insiders are being charged by the Justice Department for this scheme and TD Bank is required to cooperate in the ongoing investigations of individuals. 

TD Bank’s federal regulators and its own internal audit group repeatedly identified concerns about its transaction monitoring program. However, from 2014 through 2022, TD Bank’s transaction monitoring program did not adapt and address known deficiencies, money laundering risks or even its new products and services. The government found TD Bank failed to appropriately fund and staff its AML program. 

If you need help ensuring your financial institution is living up to its BSA requirements, contact our regulatory compliance specialists today.