TD Bank guilty of money laundering

Two US subsidiaries of Canada’s second-biggest bank agreed last week to pay $3 billion US in fines, pleading guilty to conspiring to money laundering in the United States and giving the bank a huge black eye.

US regulators imposed an asset cap and other business limitations, unusual steps that underline the seriousness of the violations.

Senior executives at the bank joked about money laundering and failed to maintain controls to prevent criminals from using the bank during an aggressive expansion in the United States, the US Justice Department said.

The bank allowed one criminal based in Queens, New York, David Sze, to move more than US$470 million through TD over three years, depositing large amounts of cash into accounts opened by other people. Sze bribed bank officials while laundering revenue from narcotics and other illicit activities.

The decade-long failure to uncover illegal activity through the bank raises questions about the quality of oversight provided by its board, the Globe and Mail wrote on Wednesday.

TD CEO Bharat Masrani, who has announced plans to retire next year, has called the plea “a sad day in our history.”

TD’s dramatic failure in the United States highlights what experts see as longstanding failings in Canada’s regulatory regime regarding money laundering.