Canadian bank fined $3bn in drug cartel money laundering scandal

US will impose an asset cap on TD Bank, limiting its ability to grow its business as part of plea deal agreement

A Canadian bank has been ordered to pay more than $3 billion to the US government to settle charges over money laundering by drug cartels.
It makes TD Bank the largest bank in US history to plead guilty to violating a federal law aimed at preventing money laundering.
The fines include $1.3 billion to be paid to the US Treasury, a record sum for a bank, and $1.8 billion to the US Justice Department.
The bank admitted to conspiring to launder money and conspiring to fail to file accurate reports or maintain a compliant anti-money laundering program as part of a plea deal.
As part of the agreement, the US will impose an asset cap and other restrictions, a rare move that will limit TD’s ability to grow its business in the world’s largest market.
Merrick Garland, the US attorney general, announced the settlement at a press conference on Thursday in which he said TD failed to monitor over $18 trillion in customer activity for about a decade, enabling three money laundering networks to operate through accounts at the bank.
Staff “openly joked” about circumventing the rules on multiple occasions, Mr Garland said, with TD choosing “profits over compliance in order to keep its costs down”.
TD is the largest bank to admit to violating the US Bank Secrecy Act, he said.
The asset cap US authorities have imposed on TD is reserved for the most severe cases and deals a major blow to the ambitions of Canada’s second-largest bank to further expand in the US, which accounts for about a third of its income.
It represents a “worst-case scenario” for TD, according to Lemar Persaud, an analyst at Cormark Securities. The bank had already set aside $3 billion for the fine.
The federal investigations into TD led to “significant underperformance of [its] stock and, we believe, the retirement of the current CEO Bharat Masrani,” Mr Persaud said.
Federal authorities reportedly began probing TD’s internal controls after agents discovered a Chinese criminal operation bribed employees and brought large bags of cash into branches to launder millions of dollars in fentanyl sales through TD branches in New York and New Jersey.
US officials have grown increasingly concerned by Mexican cartels’ use of the US banking system to launder proceeds from the sale of fentanyl and other drugs that kill tens of thousands of Americans annually, according to CNN.
TD has spent millions to strengthen its compliance programs, fired dozens of staff at its US branches and named Ray Chun as its new chief executive, distancing its leadership from the money laundering scandal.