TD Bank Hires Monitors After $1.8B AML Settlement

TD Bank is moving forward with plans to hire compliance monitors, as mandated by the U.S. government, to track its efforts to improve anti-money laundering (AML) practices. This is part of the bank's ongoing overhaul of its AML and risk control programs, which have faced regulatory scrutiny.

In a recent town hall, TD Bank's U.S. CEO Leo Salom informed workers that correcting AML inadequacies is the bank's top priority. Salom emphasized that TD Bank has the resources and commitment to enhance its compliance procedures. According to reports, the bank is working hard to choose the proper monitors who will evaluate its progress and report directly to authorities.

On October 10, TD Bank revealed plans to add a compliance monitor to its AML remediation activities. The bank is also investing extensively in compliance initiatives, with a $500 million budget for 2024 alone. This involves additional training efforts and the recruitment of top executives to boost the bank's risk management skills.

The decision comes after US regulators and authorities discovered substantial flaws in TD Bank's AML standards. On the same day as the resolution announcement, the US Department of Justice announced a $1.8 billion settlement with TD Bank and its subsidiaries. This came after an inquiry into alleged breaches of the Bank Secrecy Act (BSA) and anti-money laundering laws. As part of the settlement, TD Bank N.A. and TD Bank USA were fined $450 million by the Office of the Comptroller of the Currency (OCC) and $1.3 billion by the Financial Crimes Enforcement Network (FinCEN) of the United States Department of the Treasury.

Alan MacGibbon, Chair of TD Bank Group, recognized the bank's inability to maintain a sufficient AML program while emphasizing that responsibility will be enforced. “The Board has and continues to take action to address these failures and hold those responsible accountable,” he said.

On November 22, TD Bank also announced two major changes to its senior leadership team. Michelle Myers, senior vice president and chief accountant, will take up the post of global chief auditor on December 9. Keith Lam, who is now the deputy US Chief Auditor, will take over as interim US Chief Auditor. These leadership changes are part of TD Bank's larger attempt to improve its governance and compliance processes.

Final Thoughts

The proactive efforts taken by TD Bank to remedy its AML deficiencies, as well as the hefty financial penalties imposed, underline the crucial necessity for banks to maintain solid compliance systems. TD Bank's employment of compliance monitors, as well as a number of senior leadership changes, demonstrate its commitment to enhancing internal controls and preventing such errors in the future. Regulators and the financial sector at large will keep a close eye on the bank's efforts.