TD Bank Group is facing the largest money laundering penalty handed to a bank in U.S. history.
What happened: The Canadian bank pleaded guilty to criminal charges in the U.S. for failing to deter money laundering, particularly among drug cartels. TD will pay about US$3 billion in fines and accept a cap on its U.S. retail banking assets as part of the settlement.
- The asset cap, which is considered one of the industry’s most severe punishments, will keep the bank’s U.S. retail business from growing larger than it is now.
Big picture: Since August, U.S. regulators have fined TD $28 million for sharing incorrect customer credit information with consumer reporting agencies, $128.5 million for faulty record-keeping, and $28 million for placing fake stock orders to manipulate markets.
- In Canada, the bank was fined $9.2 million in May for failing to report suspicious transactions, and this week it agreed to pay $70.3 million to settle a lawsuit over commissions paid to brokers who were not allowed to give investment advice.
Bottom line: TD already had its US$13.4 billion acquisition of First Horizon killed last year because of a money laundering probe. Now, with an asset cap weighing on it, the bank’s almost two-decade-long effort to expand in the lucrative U.S. market is in limbo.—LA