TD Bank Hit With C$9.19 Million Penalty for Anti-Money Laundering Compliance Failings

By Robb M. Stewart

Toronto-Dominion Bank was hit with a more than $6.5 million penalty by Canada's financial-intelligence watchdog for compliance failings tied to monitoring and reporting suspected money laundering and terrorist financing.

The Financial Transactions and Reports Analysis Centre of Canada on Thursday said the lender was hit with an administrative penalty of 9.19 million Canadian dollars, the equivalent of about $6.8 million, in the wake of a 2023 compliance examination.

The fine helps draw a line under the matter for TD Bank, though it faces a much greater burden in the U.S. and is still in discussions with regulators there over regulatory and law enforcement investigations into its compliance with America's anti-money laundering rules. The bank earlier this week booked an initial $450 million provision to cover potential charges it could face in the U.S., and said it anticipates additional penalties as talks with three U.S. regulators and the Justice Department continue.

Canada's regulator said the penalty it imposed has been paid in full by TD Bank and proceedings have ended.

Fintrac said its investigation found the bank failed to submit suspicious transaction reports in cases where there were reasonable ground to suspect that transaction were related to money laundering or terrorism financing activities. Among other findings, it said TD Bank also failed to assess and document financing risks, didn't take the prescribed special measures for high risk, and failed to conduct ongoing monitoring of business relationships.

In setting aside money for matters in the U.S., TD Bank this week said its anti-money laundering program was "insufficient to effectively monitor, detect, report and respond to suspicious activity." It said work has been under way to remedy the failings, and that the bank has the capital, liquidity and capacity to fund the efforts.

Mike Rizvanovic, an analyst at Keefe, Bruyette & Woods in Toronto, in a research report said the potential for additional fines could push the total above expectations for a total charge of roughly $1 billion, though the initial provision taken by TD Bank suggests some progress toward a resolution with U.S. regulators.

TD Bank initially disclosed in August it was responding to inquiries from regulators and law-enforcement agencies about its anti-money laundering compliance generally and in connection with specific clients, counterparties or incidents in the U.S. The bank said at least some of the inquiries related to an investigation by the Justice Department.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

May 02, 2024 11:52 ET (15:52 GMT)

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