The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) assessed a record $1,300 million penalty against TD Bank, N.A. and TD Bank USA, N.A. (collectively, TD Bank, or the Bank) for breaches of the Bank Secrecy Act (BSA), the primary U.S. anti-money laundering (AML) law that safeguards the financial system from illicit use. TD Bank is among the largest banks in the United States.

The settlement is the largest penalty against a depository institution in U.S. Treasury and FinCEN history. FinCEN’s action also imposes a four-year independent monitorship to oversee TD Bank’s required remediation. TD Bank is a US headquartered and regulated bank but it is a wholly owned subsidiary of Toronto Dominion Bank of Canada.

Cutting away the dead-wood of hyperbole, buzzwords and blatent electioneering in the official statements from FinCEN and the US Treasury, of which FinCEN is part, the bare story is shocking - not for the bank but for advisers, systems auditors and regulators. Just as in the case of Starling in the UK, the question has to be how did the situation become so bad and persist for so long and why did no one notice, in particular, those with specific responsibility to do so?

It is clear that TD did have policies and procedures in place. It appears that they have not undergone signficant review for a decade.

During that decade there was a significant increase in the provision of banking services to FinTechs and FinCEN drew particular attention to two peer-to-peer networks, Venmo and Zelle, with the latter, in particular, having had its own significant problems.

in February this year, FinCEN indicated that Peer to Peer payments, such as Venmo, PayPal etc. were a cause for considerable concern. It said "Over the last decade, peer-to-peer (P2P) payments have grown in popularity and become ubiquitous
throughout the United States. P2P services – such as mobile applications Venmo, PayPal, Cash App, and Zelle – allow individuals to send and receive instant digital payments directly with another person, either in fiat currency or virtual currency. The P2P market has grown dramatically in recent years, helped along by a spike in adoption during the COVID-19 pandemic. .. P2P services have come to play a sizable role in various types of fraud and scams. These include unauthorised electronic fund transfers, seller scams, buyer scams, and money mule scams, among others." It also referred to the large and complex case of Linda Ann Been who laundered proceeds from an organised shoplifting ring using Peer to Peer payments both to launder the proceeds and to pay the shoplifters. TD Bank is far from the only bank used by Been and her associates.

An employee of TD Bank accepted bribes to facilitate the laundering of drugs money through the bank, in a scheme bearing some of the hallmarks of the Lucy Edwards/Bank of New York case in the 1990s. The bank failed to take action to plug a specific hole known across the industry. Again, where were its consultants and other advisers? They should have known and blocked it when the systems were developed and implemented.

What is most telling is "TD Bank knew that [policies and procedures were] neither appropriately designed nor adequately resourced to mitigate the actual illicit finance risks that it faced on multiple fronts."

Further reading:
FinCEN national money laundering risk assessment 2024: https://home.treasury.gov/system/files/136/2024-National-Money-Launderi…

FinCEN re TD Bank: https://fincen.gov/news/news-releases/fincen-assesses-record-13-billion…
FiNCEN / TD Bank consent order: https://fincen.gov/sites/default/files/enforcement_action/2024-10-10/Fi…