Sen. Elizabeth Warren, D-Mass., is blasting the Department of Justice for not punishing TD Bank Group more harshly over the Canadian bank's money-laundering failures in the United States.
Law-enforcement officials and regulators hit the Toronto-based bank's U.S. subsidiary with a record $3.09 billion fine and asset-cap handcuffs earlier this month in a novel money-laundering case. But the penalties imposed by the DOJ don't go far enough, Warren said Wednesday in a letter seen by American Banker.
In the letter, sent to Attorney General Merrick Garland and Deputy Attorney General Lisa Monaco, Warren pressed them to explain why the DOJ hasn't yet charged top TD executives for their culpability in the bank's crimes.
The senator also lambasted federal prosecutors for letting TD skirt particular criminal charges that would have triggered the so-called death-penalty provision — a never-before-used tool that under certain circumstances gives regulators the power to
"DOJ has so far let these bank executives off the hook for allowing the bank to be used as a criminal slush fund," Warren said in a statement to American Banker. "One thing is clear: The Department of Justice needs to do a better job in holding big corporations and their executives accountable for lawbreaking."
On Oct. 10,
The DOJ, along with the Office of the Comptroller of the Currency, the Treasury Department's Financial Crimes Enforcement Network and the Federal Reserve, found that TD effectively left $18 trillion unmonitored over six years, and that bank employees and leaders were aware of the paltry risk management.
Warren said in her letter that the DOJ has "long failed to hold corporate executives accountable for crimes that occur on their watch."
The DOJ declined to comment.
A week before the final resolution with TD was announced, Warren said she thought bank executives should be prosecuted, especially since TD was a repeat offender on compliance matters.
Garland said at an Oct. 10 press conference that the DOJ's "criminal investigations into individual employees at every level of TD Bank are active and ongoing." He added that "no individual" is off limits. The DOJ has prosecuted two dozen people involved in moving more than $670 million in dirty funds through TD, including two non-executive bank employees.
Warren said in her Wednesday letter that the DOJ's actions so far don't cut it.
"Until and unless those executives who presided over TD Bank's institutionalized money laundering are held accountable, banks will continue to factor enforcement fines into the cost of doing business, rather than approaching compliance with our money-laundering laws with the seriousness it requires," Warren said.
TD CEO Bharat Masrani has repeatedly said he takes responsibility for the AML fiasco, and he said in September that he would
TD did not immediately provide comment.
Warren's letter mirrors critiques she made more than a decade ago after a number of big banks were found to have inadequate anti-money-laundering controls. HSBC was fined $1.9 billion in what was then the costliest penalty in U.S. history for allowing drug money to pass through a bank.
During a 2013 Senate committee hearing that followed the compliance flubs, Warren asked regulatory officials, speaking of big banks, "how many billions of dollars do you have to launder for drug lords" to have a charter revoked.
Retired bank regulators, lawyers, academics and nonprofit leaders have said recently that the massive scope of TD's risk management blunders is
Although TD is the largest bank in U.S. history to plead guilty to Bank Secrecy Act program failures and the first bank to plead guilty to money-laundering conspiracy violations, Warren said the specific charges thrown at the Canadian bank were calculated to avoid the threat of charter termination. Congress gave federal bank regulators the power to revoke charters in money laundering cases more than three decades ago, but they have never exercised it.
"The settlement also allows TD Bank to evade the full scope of penalties that Congress intended for bank regulators to employ in response to criminal money laundering," Warren said.
Some observers say the DOJ has avoided triggering the death-penalty provision so as not to throw uncertainty into the financial system. One price of that decision is leaving regulators and law-enforcement officials open to vitriol from politicians and progressive groups.
In the past, the Justice Department and the OCC have denied acting in cahoots with each other to keep banks safe from hearings on whether to revoke their charters. Warren asked the DOJ in her Wednesday letter if and how the agency consulted with bank regulators during its negotiations with TD.
"To better understand DOJ's approach to negotiating" TD's pleas, Warren also asked why the bank wasn't charged with money laundering, why
In connection with TD's guilty plea, the OCC put a limit on the growth of two TD subsidiaries, marking
While TD's U.S. holding company pleaded guilty to causing the bank to bungle its anti-money-laundering controls, such parent companies aren't subject to the death-penalty provision, like banks are.
Meanwhile, the banking subsidiary's crimes included conspiracy to fail to maintain an adequate AML program, conspiracy to fail to report activity; and conspiracy to launder money. The key phrase "conspiracy to" exempts TD from the death-penalty provision, which Warren called "frankly ridiculous."
"In plain terms, if DOJ had charged TD Bank with the crime it committed — money laundering — the OCC would have been legally required to serve TD Bank with a notice of intent to terminate the bank's charter and to hold a hearing to publicly discuss the merits of a charter revocation," Warren said
She added that TD Bank is the entity that failed to perform adequate AML.
"These charging decisions represent absurd legal gymnastics by the DOJ that ultimately have allowed the bank and its top executives to avoid full responsibility for their actions," Warren said. "This is not an acceptable outcome."
