TD Bank, a major US financial institution, is facing a significant regulatory penalty over allegations of facilitating money laundering for Chinese drug gangs. The bank has set aside an additional $2.6 billion to cover the expected fine, bringing its total reserve to over $3 billion.
The investigation, conducted by US regulators, centers on accusations that Chinese criminal organizations used TD Bank to launder approximately $650 million in proceeds from illegal drug trafficking activities between 2016 and 2021. The bank’s anti-money laundering (AML) program is alleged to have failed to detect and prevent these illicit transactions.
To mitigate the financial impact of the impending penalty, TD Bank is selling a portion of its stake in Charles Schwab. The sale is expected to generate funds to contribute towards the anticipated regulatory fine.
Earlier this year, reports emerged that TD Bank was in discussions with three US regulators, including the Department of Justice, regarding its AML program deficiencies. The bank admitted in a statement that its controls failed to identify the suspicious activities of the drug traffickers. Additionally, a former TD employee has been accused of accepting bribes to facilitate the illicit transactions.
In its latest earnings report, TD Bank disclosed that the investigations into its AML program had resulted in losses of $181 million in the third quarter of this year. TD CEO Bharat Masrani emphasized the importance of addressing the bank’s AML inadequacies, stating that it is a top priority for the company.
“We recognize the seriousness of our U.S. AML program deficiencies and the work required to meet our obligations and responsibilities is of paramount importance to me, our senior leaders, and our Boards,” Masrani said. “Our remediation program is well underway.”
TD Bank has taken steps to strengthen its AML program by hiring experienced professionals from the industry, including experts from regulatory agencies, law enforcement, and government. The bank is working cooperatively with regulators to resolve the investigations and provide clarity to its shareholders, clients, and other stakeholders.
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TD Bank expects to reach a global resolution with regulators by the end of the year. The bank’s US operations, based in Wilmington, Delaware, have over $370 billion in assets under management and rank as the 10th-largest commercial bank in the United States.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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