NEWARK, N.J. — A federal judge on Thursday accepted the terms of a plea agreement between federal prosecutors and TD Bank after an investigation found money laundering and violations of the Bank Secrecy Act.
The terms of the deal put the bank and its U.S. holding company into a five-year probationary period, and they also include a fine of over $1.4 billion. U.S. District Judge Esther Salas said it's the largest fine she's ever imposed.
"This is [a situation] where many of our corporate entities, our banks, will [need] to think about compliance in a different way: Are they playing dumb, or are they playing fair?" Salas said. "Everyone is subject to punishment, everyone is subject to investigation, and everyone must adhere to the laws that are set out in this country to ensure compliance, ensure that we are doing our part as a nation to thwart criminal activity where possible."
Under the terms of probation, TD must adhere to all sentencing conditions, avoid further crimes, and maintain honesty with the court. It must also pay the $1.4 billion fine, forfeit $452 million of property involved in the offense and retain an independent compliance monitor for three years.
When the plea deal was announced in October, Department of Justice officials said the Canadian bank prioritized profits over regulatory compliance. TD's fine represents the largest penalty of its category in the financial industry and is one of the most significant examples to date of government action aimed at holding financial institutions accountable for lapses in combating money laundering.
The DOJ found that TD ignored red flags that suggested illicit financial activity. In some cases, customers regularly transacted piles of cash at TD branches in New York. The bank enabled suspicious transactions to flow through its channels, failing to report them or to implement effective compliance measures.
"This is the greatest country in the world," said Judge Salas. "We have the ability to profit, and we should be able to profit, but not at the expense of the law."
In the plea agreement, prosecutors attributed TD Bank's failures partially to the bank neglecting due diligence and deliberately ignoring glaring red flags.
Under a related agreement that TD reached with its primary prudential regulator — the Office of the Comptroller of the Currency — the bank's U.S. assets are capped. The OCC may also require the bank to divest from assets if the bank continues to remain noncompliant over time.
But TD gets to keep its U.S. banking charter, avoiding the so-called death penalty that Congress established as a potential punishment in money-laundering cases.
Also notably absent from the historic plea agreement was any mention of criminal charges against TD executives who oversaw the bank during its involvement in a yearslong money-laundering conspiracy.
While Attorney General Merrick Garland said last month that "criminal investigations into individual employees at every level of TD Bank are active and ongoing," experts
The DOJ has prosecuted two non-executive employees of the bank, and two dozen people altogether, in connection with the movement of more than $670 million in dirty funds through TD.
