The bank’s historic guilty plea shows the US’s focus on money laundering

For the first time, a U.S. bank has pleaded guilty to helping criminal networks in Colombia launder hundreds of millions of dollars worth of money, highlighting the fruits of renewed efforts to target those helping money launderers in the region.

TD Bank, N.A. and TD Bank USA, N.A. pleaded guilty to a money laundering conspiracy and violation of the Bank Secrecy Act (BSA) that resulted in a record $1.8 billion fine but no high-profile arrests level, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) was announced on October 10.

For almost a decade, the bank failed to update its anti-money laundering system to detect suspicious transactions and ignored repeated warnings about these lapses. During that time, the bank failed to monitor more than $18 trillion in activity, which court documents say allowed three Colombian criminal networks to launder more than $600 million in illicit proceeds.

“TD Bank’s chronic failures have created fertile ground for a number of illicit activities that have seeped into our financial system,” said Treasury Deputy Secretary Wally Adeyemo. “We make clear that financial institutions will face serious consequences if they do not maintain the necessary safeguards.”

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Prosecutors said high-level officials working on the bank’s global anti-money laundering operations, senior executives and others on the bank’s audit committee were aware of “long-term, widespread and systemic deficiencies” in anti-money laundering protocols.

Other lower-level employees were also involved. For example, financial services representatives and retail bankers in Florida and New Jersey helped one money laundering network open accounts and obtain ATM cards that were used to launder money from the United States into Colombia through large cash withdrawals. Court records show that in exchange for bribes, employees even helped bypass internal inspections and roadblocks.

“We have accepted full responsibility for the failures of our US AML (anti-money laundering) program and are making the investments, changes and improvements necessary to meet our commitments,” said Bharat Masrani, Group President and CEO at TD Group Bank.

InSight Crime Analysis

The historic announcement by the 10th-largest bank in the United States is just the latest part of what appears to be an intensified push by the U.S. government to crack down not only on money launderers but also on the financial institutions that enable their illicit activities.

“One of the main reasons for the introduction of the Bank Secrecy Act is that it is very difficult to prove that a bank or its employees knowingly accepted dirty or suspicious money and transferred it through their channels” – Scott Greytak, director of transparency The US office of International reported InSight Crime.

TD Bank is not the only U.S. financial institution to come under fire for helping criminal networks launder illicit proceeds. In 2012, HSBC Bank and several of its subsidiaries lost more than $1 billion after failing to properly monitor hundreds of billions of dollars in wire transfers in countries such as Mexico. Wells Fargo was recently penalized in 2022 and 2024 for failing to report questionable transactions and having insufficient internal anti-money laundering controls.

However, TD Bank is the first U.S. bank to plead guilty to money laundering charges and admit that its employees knowingly accepted dirty money and transferred it through the institution.

SEE ALSO: Corruption, Crypto Test LatAm Money Laundering Regulations

The historic settlement agreement comes as the United States implements new anti-money laundering measures. Earlier this year, a regulation called the beneficial owner rule went into effect, which aims to improve oversight of shell companies by requiring all U.S. companies to report the corporation’s true owner and who controls its resources.

In the case of TD Bank, some of the individuals involved used anonymous shell companies to set up fake bank accounts and launder millions of dollars. Greytak said that if beneficial ownership requirements were already in place, law enforcement could look into these suspicious transactions and identify the true owners of the shell companies.

With the new rules, criminal groups will either have to “break the law by not reporting who actually owns the company, which constitutes a crime, or report this information and lose the cover provided by such front companies,” he added. “Fortunately, law enforcement will now be able to pierce through this corporate veil and find out who is behind this operation.”

While the settlement with TD Bank is the first in history, the small number of these allegations and successful cases is a stark reminder of the continued lack of funding and institutional support for in-depth financial investigations.

“Even when it comes to the core element of our anti-money laundering framework, the banks themselves, which are at the center of this regulatory history, the framework is only effective if you have the adequate financial resources and enforcement capabilities of the federal government and law enforcement agencies to pursued those who did not comply,” Greytak said.

Featured image: U.S. Attorney General Merrick Garland announces historic settlement with TD Bank. Source: Associated Press.