TD Bank pleads guilty to US charges, faces business restrictions

According to US authorities, two TD Bank divisions have admitted guilt to federal government money laundering investigations and agreed to pay $ 3 billion in combined fines.

Authorities said on Thursday that the plea deal also places an asset cap and other restrictions on the company’s business. According to the US Department of Justice, the bank has admitted to conspiring to launder money and conspiring to omit timely reports or comply with an anti-money laundering program.

The Office of the Comptroller of the Currency imposed a rare step that is typically reserved for serious cases, limiting the country’s ability to expand its assets. It would severely undermine TD’s plans to grow even further in the US, which generates about a third of the bank’s income.

Additionally, TD agreed to pay US banking regulators, the Justice Department, and the Financial Crimes Enforcement Network, a combined fine of $3 billion.

The Justice Department, the Office of the Comptroller of the Currency, and the Treasury’s Financial Crimes Enforcement Network were all found guilty by the resolution of the case. Additionally, independent monitoring was mandated.

An asset cap is “worst-case scenario” for TD, said Cormark Securities analyst Lemar Persaud, prior to the details of the plea deal being announced. The bank already had the fine in the $3 billion range.

Persaud drew a parallel with Wells Fargo, which has a $1.95 trillion asset cap in place following a fake accounts scandal, which has constrained its earnings. An asset cap would also constrain TD’s profits, but to a lesser extent than it did for Wells Fargo, he said.

The TD probe has led to “significant underperformance of the stock and, we believe, the retirement of the current CEO Bharat Masrani”, Persaud said.

TD is Canada’s second-biggest bank and the 10th-largest in the US. Just a few months after terminating its $ 13 billion acquisition of regional lender First Horizon, the lender first made it clear that it was responding to inquiries from law enforcement and regulators last year.

According to a source, federal authorities began looking into TD’s internal controls after discovering a Chinese criminal operation that bribed employees and brought large bags of cash into TD branches to extort millions of dollars in fentanyl sales through&nbsp, TD branches in New York and New Jersey.

TD has spent millions to improve its compliance procedures, fired dozens of employees in its US branches, and named Ray Chun as its new CEO, distancing its new chief from the money-laundering scandal.