TD Bank to pay $3 billion for allowing drug cartels to launder money

WASHINGTON (CN) — TD Bank pleaded guilty Thursday to charges of money laundering and violations of the Bank Secrecy Act for failing to properly monitor money laundering by drug cartels, and agreed to pay $3 billion to settle the case.

TD bank, the 10th largest bank in the country, had systematically failed to address “systemic deficiencies” in its anti-money laundering policies over nine years, and in certain cases knowingly took bribes to open accounts for drug traffickers.

More than 90% of transactions went unmonitored between January 2018 to April 2024, which “enabled three money laundering networks to collectively transfer more than $670 million through TD Bank accounts between 2019 and 2023,” according to the Justice Department.

Between January 2018 and February 2021, one money laundering network processed over $470 million through the bank via large cash deposits.

According to the Justice Department, individuals behind the scheme bribed employees with gift cards worth more than $57,000 to continue processing the transactions.

Despite the individuals depositing well over $10,000 in cash, the limit at which a bank should report the deposits as suspicious, bank clerks did not identify the individuals in required reports.

The penalty includes a $1.3 billion fine to be paid to the Treasury Department’s Financial Crimes Enforcement Network and $1.8 billion to the Justice Department, totaling the largest fine under the Bank Secrecy Act.

Attorney General Merrick Garland, at a press conference Thursday announcing the plea agreement, said that TD Bank was the first bank in U.S. history to plead guilty to conspiracy to commit money laundering and was the largest bank to plead guilty to Bank Secrecy Act violations.

“Our laws dictate that the narcotics traffickers who flood our communities with deadly drugs cannot use American financial institutions to move their money,” Garland said.” And our anti-money laundering laws dictate that a bank that willfully fails to protect against criminal schemes is also a criminal.”

In a second money laundering scheme between March 2021 and March 2023, a “high-risk” jewelry business moved nearly $120 million through shell accounts before anyone at TD Bank reported the transactions. In the third scheme, money laundering networks deposited funds in the United States then quickly withdrew them from ATMs in Colombia.

According to the Justice Department, five TD Bank employees worked with the network, issuing dozens of ATM cards and ultimately conspiring in the laundering of approximately $39 million.

Prosecutors charged over two dozen individuals across the three schemes, including two bank insiders.

According to theJustice Department’s statement of facts, the bank’s status as a money laundering destination had become an open secret among TD Bank employees. In one October 2021 exchange, two employees in the bank’s anti-money laundering program joked about how convenient TD Bank was.

“What do the bad guys have to say about us?” an unnamed anti-money laundering technologist asked a colleague.

“Lol, easy target,” the colleague, a global anti-money laundering manager, responded.

Over the last decade, TD Bank repeatedly ignored concerns about its transaction monitoring program, necessary to detect and report suspicious activity, from its federal regulators and its own internal audit group. Prosecutors said the bank failed to fund and staff its anti-money laundering program, instead postponing and canceling necessary projects to prioritize a “flat cost paradigm” and the “customer experience.”

Deputy Attorney General Lisa Monaco said in Thursday’s press conference that the plea agreement should be a lesson to every bank CEO and board member.

“For years, TD Bank starved its compliance program of the resources needed to obey the law,” Monaco said. “Today’s historic guilty plea, including the largest penalty ever imposed under the Bank Secrecy Act, offers an unmistakable lesson: crime doesn’t pay — and neither does flouting compliance.”

Prosecutors identified one regular launderer, Da Ying Sze, known to TD Bank employees as “David,” who moved approximately $474 million through banks in New Jersey, New York, Pennsylvania, Maine and Florida.

David, who pleaded guilty to engaging in more than $653 million in illegal transactions, operating an unlicensed money transmitting business and bribing bank employees in February 2022, said TD Bank had “by far the most permissive policies and procedures.”

While David bribed employees with $57,000 in gift cards, his conduct was clearly suspicious to even a casual observer, prosecutors said.

In one instance, David conducted a $372,000 cash transaction at a location in midtown New York in the summer of 2020. Later that day, he conducted a $290,000 cash transaction at another location.

TD Bank employees, at multiple levels throughout the company, were aware of and understood David’s actions were illegal, with one store manager telling another “You guys really need to shut this down LOL.”

When David purchased over $1 million in official bank checks in one day, a store employee asked “how is that not money laundering,” to which a back office employee merely responded, “oh it 100% is.”

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