Merrick Garland Announces Legal Actions Against TD Bank

… who’ve had their lives turned upside down by Hurricane Milton and Hurricane Helene. I know I speak for all of us in expressing my gratitude to the first responders on the ground who are carrying out rescue missions, and I want to thank all the volunteers who are helping their neighbors get through these storms. And now to the subject of today’s announcement. Today, TD Bank pled guilty to multiple felonies, including conspiring to violate the Bank Secrecy Act and commit money laundering. TD Bank has also agreed to a $1.8 billion criminal penalty combined with civil enforcement actions announced today by other agencies. The United States will be imposing a total of approximately $3 billion against TD Bank. TD Bank created an environment that allowed financial crime to flourish. By making its services convenient for criminals, it became one. Today, TD Bank became the largest bank in US history to plead guilty to Bank Secrecy Act program failures and the first bank in history to plead guilty to conspiracy to commit money laundering.

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This is also the largest ever penalty under the Bank Secrecy Act and the first time the Justice Department has assessed a daily fine against a bank. As part of the plea agreement, TD Bank will fundamentally restructure its corporate compliant program at its US based bank, which is the 10th largest in the United States. The bank has also agreed to the imposition of a three-year monitorship and a five-year term of probation. While the bank has started its remediation, it will continue to remediate and improve its anti-money laundering compliance program to ensure that the bank operates lawfully and safely moving forward. In addition to obtaining today’s corporate felony pleas, the Justice Department has also prosecuted two dozen individuals for their involvement in money laundering schemes that moved over $670 million in illicit funds through TD Bank accounts. So far, the Justice Department has charged two TD Bank employees for their involvement in one of these schemes.

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Pursuant to the plea agreement, TD Bank is required to fully cooperate with a Justice Department’s investigation of the bank and any of its officers, directors, and employees. If the bank fails to do so, it will again be subject to criminal prosecution in which the statement facts that are part of the plea agreement may be used as evidence against it. Our criminal investigations into individual employees at every level of TD Bank are active and ongoing. As is the case in all corporate criminal matters, no one involved in TD Bank’s illegal conduct will be off limits. We will follow the evidence wherever it leads. Federal anti-money laundering laws are designed to prevent criminals from using US banks to fuel their crimes. Our laws dictate that the narcotics off traffickers who flood our communities with deadly drugs cannot use American financial institutions to move their money, and our anti-money laundering laws dictate that a bank that willfully fails to protect against criminal schemes is also a criminal.

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That is what TD Bank was because it failed to maintain an adequate anti-money laundering program. Between January, 2014 and October, 2023. Over a six-year period, TD Bank failed to monitor $18.3 trillion dollars in customer activity. As TD Bank admitted in its plea agreement, this allowed three money laundering networks to transfer over $670 million through TD Bank accounts. At least one of those schemes involved five TD Bank employees. The bank maintained an automated transaction monitoring system that was supposed to detect and generate alerts on suspicious transactions and activities, but that system was willfully deficient. As the bank admitted in the statement of facts, which had filed today, at various times, high level executives, including the person who became the bank’s chief anti-money laundering officer, knew there were serious problems with the bank’s anti-money laundering program, but the bank failed to correct them. Three money laundering networks took advantage of TD Bank’s failed anti-money laundering system.

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First, over the course of a three-year period, a person who TD Bank employees knew as David moved over $470 million in illicit funds through TD Bank branches in the United States. David has separately pled guilty to laundering drug proceeds through the bank. David had attempted to launder money through numerous financial institutions, but he found that TD Bank had the most permissive policies and procedures and so chose to launder most of his funds there. He also bribed TD Bank employees with more than $57,000 in gift cards in furtherance of his scheme. David’s illegal conduct was obvious to say the least. On more than one occasion, he deposited more than $1 million in cash in a single day. He then immediately moved the funds out of the bank using official bank checks and wire transfers.

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TD Bank employees at many levels understood and acknowledged the likely illegality of David’s activity. In August 21, TD Bank store manager emailed another store manager and remarked, “You guys really need to shut this down. LOL.” In late 2020, another store manager implored his supervisors, several TD Bank regional managers to act noting that, “It is getting out of hand and my tellers are at the point that they don’t feel comfortable handling these transactions.” In February, 2021, one TD Bank store employee saw that David’s network had purchased more than $1 million in official bank checks with cash in a single day. The employee asked, “How is that not money laundering?”

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A back office employee responded, “Oh, it 100% is.” In a second separate money laundering scheme, five TD Bank employees conspired with criminal organizations to open and maintain accounts at the bank that were used to launder $39 million to Columbia, including drug proceeds. That money laundering organization reused the same Venezuelan passports to open multiple accounts at TD Bank. It sometimes used the same passport to obtain multiple debit cards for a single account. Despite significant internal red flags, the bank did not identify that its own employees were conspiring to launder tens of millions of dollars to Columbia until law enforcement arrested one of them. And yet a third scheme outlined in today’s charges, a money laundering network maintained accounts at TD Bank for at least five shell companies, used those accounts to move over $100 million in illicit funds through the bank. Even though retail employees flagged suspicious activity connected to those accounts, the bank did not file a suspicious activity report until law enforcement alerted the bank to the money laundering network’s activities. By that time, the accounts had been open for over 13 months and had been used to transfer nearly $120 million.

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On multiple occasions, bank employees openly joked about the bank’s enabling of criminal activity. In one instance, a compliance employee asked a manager what “the bad guys” thought about the bank. The manager replied, “LOL. Easy target.” Other employees consistently joked on the bank’s instant messaging platform about the bank’s motto, “America’s most convenient bank.” They linked it to the bank’s approach to combating money laundering. For example, a compliance employee asked a colleague why “all the really awful ones bank here? LOL.” The colleague replied, “Because we are convenient.” There is nothing wrong with a bank that tries to make its services convenient for its honest customers, but there is something terribly wrong with a bank that knowingly makes its services convenient for criminals. The Bank Secrecy Act requires financial institutions like TD Bank to establish and maintain compliance programs that guard against money laundering. But TD Bank chose profits over compliance in order to keep its costs down. That decision is now costing the bank billions of dollars in criminal and civil penalties.

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Less than a year ago, the Justice Department secured felony guilty pleas from Binance, the world’s largest cryptocurrency exchange, and from its founder

… and CEO. We also obtained one of the largest corporate penalties in US history. The department’s actions against both Binance and TD Bank are a reminder that financial institutions in this country have an obligation to guard against criminals exploiting their services. The Justice Department will aggressively prosecute any company that fails to do so. I want to express my gratitude to the public servants of the Justice Department’s Criminal Division, the US Attorney’s Office for the District of New Jersey, and the DEA for their extraordinary work on this case. We are also grateful to IRS Criminal Investigations, the FDIC’s Office of Inspector General, FinCEN, and our other federal state and local partners for their work. I am proud of them. I will now turn the podium over to Deputy Attorney General Monaco.

Thank you, Mr. Attorney General, and good afternoon, everyone. Today, one of North America’s largest banks pleaded guilty to some of the most serious charges a financial institution can face. This case should serve as a warning and a reminder that we will hold corporate wrongdoers accountable no matter their size or their stature. But this case also highlights the critical importance of maintaining a culture of compliance, and it offers a cautionary tale of how bad things can go without one. When you put your hard-earned money in a bank, that bank should meet a very basic requirement, it should follow the law. For financial institutions, that means among other things, adhering to the Bank Secrecy Act. This law is fundamental not only for protecting our financial system, but also our national security. The BSA requires that banks maintain robust anti-money laundering programs, report suspicious activity, and train employees to be the first line of defense against money laundering.

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Despite being one of the largest banks in the country, TD Bank failed to meet these requirements and violated the law. Even as profits rose, the bank starved its compliance program of the resources it needed to obey the law. Time and time again, TD Bank failed to meet its obligations day after day, year after year. The problems were so widespread, so pervasive that it was only a matter of time before the bank’s own employees could exploit these failures and engage in money laundering themselves. And that’s exactly what happened. As TD Bank admitted in its plea today, its anti-money laundering failures spanned nearly a decade. Things got so bad that five of the bank’s own employees participated in a scheme that laundered millions of dollars to Colombia resulting in felony convictions for individuals both inside and outside of the bank. What makes this even more troubling is that for years, TD Bank knew of its compliance failures. In 2013, federal regulators began penalizing the bank for the lack of money laundering controls. But as the light continued blinking red, TD Bank could only see green. Every bank compliance official in America should be reviewing today’s charges as a case study of what not to do, and every bank’s CEO and board member should be doing the same because if the business case for compliance wasn’t clear before, it should be now. The Bank Secrecy Act includes a unique penalty provision, the ability to fine a financial institution up to $500,000 for each day that it lacks a functional anti-money laundering program. The daily fine provision is rarely used. In fact, the Justice Department has never before sought this maximum daily penalty against any financial institution until now. The financial penalty under today’s resolution is based on TD Bank’s failure to maintain an effective anti-money laundering program every single day from the beginning of 2014 to the end of October 2023.

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Today’s guilty plea and the resulting $1.8 billion penalty represents the largest penalty ever imposed under the Bank Secrecy Act, and it provides an unmistakable lesson. Crime doesn’t pay and neither does flouting compliance. This resolution also sets a new course for TD Bank. With today’s guilty plea, TD Bank has agreed to tough new rules. It must overhaul its compliance program. It must retain an independent compliance monitor. It must report misconduct to the government, and it must cooperate in our ongoing criminal investigations into the individuals responsible up and down the corporate ladder.

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The bank has begun this work and we will continue to hold its feet to the fire. We’re putting down a clear marker on what we expect from financial institutions and the consequences for failure. When it comes to compliance, there are really only two options. Invest now or face severe consequences later. As I’ve said before, a corporate strategy that pursues profits at the expense of compliance isn’t a path to riches, it’s a path to federal prosecution. I want to thank the women and men of the Justice Department’s Criminal Division, the US Attorney’s Office for the District of New Jersey, and the investigative partners joining us today for their continued work on this matter. And with that, I’ll pass it to Deputy Secretary of the Treasury Wally Adeyemo.

Good afternoon. Thank you. I’m glad to join the Attorney General and the Deputy Attorney General and the rest of you here today. The Department of the Treasury utilizes sanctions and the enforcement of our country’s anti-money laundering laws to protect our national security from illicit actors. From drug trafficking to combating Russian aggression, the Treasury Department is committed to using all the tools available to us to protect the American people. We’re proud of the public-private partnership we have formed with financial sector to protect our national security. The vast majority of financial institutions work hand-in-hand with the Treasury Department to keep our country and our communities safe. TD Bank has done the exact opposite.

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For more than a decade, through deliberate actions and inactions, TD Bank failed to meet its core responsibility. TD Bank failed to implement or maintain a sufficient AML compliance program. TD Bank failed to monitor trillions of dollars in transactions each year, including those the bank knew posed a high risk for abuse. TD Bank failed to conduct adequate due diligence on high-risk customers ignoring glaring red flags. TD Bank failed ultimately to live up to its responsibility to the American people. And I want to be clear, these systemic failures did not just create hypothetical vulnerabilities, but they resulted in actual material harm to the American people and our communities.

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Time and again, unlike its peers, TD Bank prioritized growth and profits over complying with the law. The bank enabled drug trafficking. In one example from FinCEN’s investigation, TD Bank facilitated over $400 million in transactions to launder money on behalf of criminals that were selling fentanyl and other deadly drugs that are poisoning our neighborhoods. In exchange for filing false or misleading reports on these transactions, TD Bank tellers accepted gift cards as bribes.

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In another example, TD Bank failed to detect the suspicious activities of one of its own employees who’s accepting bribes in exchange for opening accounts in the name of shell companies. That’s why today, we’re announcing the Financial Crime Enforcement Network’s $1.3 billion penalty on TD Bank, the largest civil monetary penalty against a bank in the Treasury Department’s history. In addition to this historic penalty, TD Bank has agreed to a four-year monitor to oversee its extensive remedial measures, including end-to-end review of its AML program. The bank will also be required to provide missing

… seeing suspicious activity reports, and for the first time, FinCEN will acquire additional accountability and data governance reviews to provide recommendations for changing TD Bank’s culture of compliance. Together, these requirements hold TD Bank accountable for its egregious and willful disregard of the law and the real harm it caused to the American people. This action demonstrates that we’re committed to holding individuals and institutions no matter their size accountable. Let me end by thanking the talented men and women of FinCEN, the IRS Criminal Investigations team, the Office of the Controller of the Currency, the Federal Reserve, and of course our partners here at the Department of Justice for their collaboration and the hard work to bring this criminal enterprise to an end and these criminals to justice. Together, we work day and night to protect the national security of the United States, and I’m grateful for all of their efforts. I’ll turn it back over to my colleagues from the Department of Justice.

Thank you. I’m Nicole Argentieri, Principal Deputy Assistant Attorney General, and head of the criminal division. Today, we are announcing the guilty plea by TD Bank, the 10th largest retail bank in the United States for Bank Secrecy Act violations and money laundering conspiracy. Over the course of a decade, TD placed profits over compliance, prioritizing a flat cost paradigm that limited spending across the bank, including on the bank’s AML compliance program despite growing risks, while profits soared.

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The bank knew that it had pervasive and systemic deficiencies in its AML program, including a transaction monitoring system that remained stagnant over the course of 10 years despite warnings from regulators, consultants, even its own employees. AML employees joked that the bank’s failed AML system made TD an easy target and a convenient bank for bad actors, and they were right. TD’s failed AML compliance program created vulnerabilities that criminals, including TD’s own employees, used to launder money through the bank.

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All told, three large money laundering networks, two prosecuted by our partners in the district of New Jersey and a third prosecuted in the district of Puerto Rico, they laundered over $670 million through TD. And in one of those schemes, five bank insiders helped. These TD and bank employees opened and maintained accounts for money laundering networks. They provided dozens of ATM cards that the launderers used to withdraw funds in Columbia shortly after the money was deposited in the United States.

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The insiders took kickbacks for their work, sometimes using the very debit cards they issued to the money laundering organization in order to take their cut. Through the TD accounts these five insiders opened, the laundering networks moved over $39 million in illicit funds. And that’s why today, TD Bank has pleaded guilty not only to violating the Bank Secrecy Act, but also to money laundering conspiracy, because TD Bank’s inadequate AML program allowed bank insiders to facilitate a significant money laundering scheme.

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This resolution, in addition to the historic daily BSA fine we have imposed, sends a clear message to U.S. financial institutions. You are the first line of defense. When you criminally fail to protect your own bank from money laundering, you put our financial system at risk and we will hold you accountable. But it is never too late to do the right thing. After TD learned of our investigation, the bank provided strong cooperation. For example, TD identified additional misconduct and provided evidence of that misconduct to the department. Some of that evidence helped advance our investigation of individuals, including video surveillance footage that TD provided after reviewing hundreds of hours of videotape, and other evidence that was recovered only because TD secured the workplaces of employees involved in misconduct.

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What’s more, TD took steps on its own to hold its employees financially accountable. The bank clawed backed bonuses, including for its CEO and other executives, resulting in a dollar for dollar reduction of the bank’s fine by approximately $2 million. And that’s consistent with the criminal division’s pilot program on compensation incentives and clawbacks. Under that pilot program as of today, 10 companies that have resolved with the criminal division have implemented compliance metrics in their compensation systems. But today’s resolution marks the first. This is the first time a company has committed to clawing back compensation prospectively.

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Over the next few months, TD will identify additional compensation it will claw back from its employees, and if TD succeeds in those clawbacks during the term of its agreement with the department, the criminal division will credit those clawbacks against the fine. TD has also started on the path to reform, beginning to remediate its compliance system, committing to additional compliance enhancements, and agreeing to retain an independent compliance monitor. That monitor will closely assess TD’s compliance with our agreement while moving swiftly to ensure that TD makes the necessary reforms.

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Under the close oversight of the department and the monitor, TD can right the ship. And while there is a long road ahead, today’s resolution demonstrates that a company can be held accountable for serious crimes while also choosing a different path for the future. And that’s by accepting responsibility, cooperating with the department, and successfully move its business forward in full compliance with the law. I want to thank today our trial attorneys in the Money Laundering and Asset Recovery Section’s Bank Integrity Unit. I also want to thank our partners in the district of New Jersey, along with our law enforcement partners at IRS Criminal Investigations, FDIC OIG, and DEA. And now, I’ll turn it over to the US Attorney for the District of New Jersey, Philip Sellinger.

Good afternoon. I’m Philip Sellinger, United States Attorney for the District of New Jersey. Today, TD Bank is pleading guilty in the district of New Jersey for its staggering and pervasive anti-money laundering failures, which include permitting multiple major money laundering networks to flourish and move hundreds of millions of dollars through TD bank locations in New Jersey and across the United States. Despite its legal obligation to maintain an effective anti-money laundering program, TD Bank instead implemented a fundamentally flawed and outdated AML program that allowed for staggering money laundering and other criminal activity to thrive at the bank.

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Even though its business, its risks, its profits were increasing significantly, TD held its compliance budget essentially flat year over year. The bank categorically failed over time to update its transaction monitoring scenarios, which was supposed to capture suspicious activity for further analysis. From 2014 to 2022, it added zero new scenarios, significantly contributing to an outdated, stale, and wholly ineffective anti-money laundering program. Further, banks of TD’s size used automated transaction monitoring systems to meet their legal obligation to identify and report suspicious activity, like the movement of drug money.

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TD Bank intentionally excluded common types of financial transactions from its automated transaction monitoring system. This meant, for example, that TD Bank chose essentially not to monitor anyone using checks to commit crimes. So while it nominally had a compliance program from January 2018 to April 2024, TD Bank failed to monitor approximately 92% of its total transactions, amounting to approximately $18. 3 trillion of transaction activity. Additionally, in April 2017, the bank began offering access to Zelle, which allowed customers to transfer money using their mobile devices. But TD Bank effectively created no way to monitor its Zelle activity so that, for example, a drug trafficker could transfer thousands of dollars a month without

… Without being flagged. TD Bank’s stunningly widespread failures allowed criminal proceeds to flow through TD Bank. For example, a major money launderer, Da Ying Sze, known to bank employees as David, laundered more than $470 million through TD Bank. David bribed TD Bank employees with more than $57,000 in gift cards. And David, on a nearly daily basis, brazenly dumped piles of cash at TD Bank branch counters, which he used to conduct transactions in other people’s names. Another network laundered $120 million in illicit funds through TD Bank, using purported diamond, gold and jewelry businesses, which the bank’s deficient AML program failed to identify as suspicious. Separately, five TD Bank employees helped facilitate major money laundering activities from inside the bank. For example, a New Jersey-based bank employee, allegedly in exchange for bribes, facilitated money launderers’ efforts to use ATM withdrawals to move tens of millions of dollars from the United States to Colombia for drug traffickers. TD Bank’s anti- money laundering failures were well-known at every level of the bank. The bank knew it was significantly underspending on compliance year after year. The bank knew it wasn’t monitoring huge swaths of banking activity, and it knew that millions of dollars were being funneled through TD Bank accounts from the US to Colombia, using ATMs. It knew that peer-to-peer money transfers, like Zelle, went essentially unmonitored. It knew that employees had repeatedly identified the need for new transaction monitoring scenarios to adequately capture money laundering in other risks the bank faced. And it adopted zero changes to really fix any of these massive problems, repeatedly prioritizing profits and the convenience over meeting its legal obligations. It’s no wonder then that the motto, “America’s most convenient bank,” was used as a joke among employees to describe TD Bank being convenient for criminals.

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I want to credit all of the extraordinary work done on this case by the prosecution team, including Marco Pesce, Angelica Sinople and Cynthia Trochez at the US Attorney’s Office for the District of New Jersey, and our partners at MLARS, IRS Criminal Investigations, FDIC, OIG and the DEA. Thank you.

Questions?

Hi. So you talked a lot about individual accountability and I just was hoping you might be able to elaborate a little bit on why we haven’t seen more than two people charged here, in particular because you mentioned that there are five insiders in the Columbia scheme if we’ve only seen two of them charged. Can you talk a little bit about that? And two, I’m going to shoot my shot here on this off-topic and ask you, this week you arrested an Afghan citizen for plotting a threat on election day in the name of ISIS.

I will answer your off-topic, but before I forget your on-topic, can I answer that?

Please. Please.

Yeah. Okay.

Thank you.

So as I said, we have an ongoing investigation. We now have the assistance of cooperation of the bank with respect to investigations of individuals. Can’t comment on the ongoing investigation, but it is continuing aggressively and we do expect to see more prosecutions. Second question started on terrorism. Go ahead.

Okay. Yes. I just was wondering if you can talk a little bit about the current threat from ISIS right now and if you are concerned at all about an election day threat from ISIS?

So we have been warning for quite some time now, both the Justice Department, the FBI and the intelligence community, that we are in a heightened threat environment from maligned foreign actors, including in particular ISIS. The investigation that resulted in arrests two days ago was an extraordinary effort by the FBI and the criminal division in the US Attorney’s Office to disrupt that plot and then to prosecute the people responsible. We will continue to aggressively investigate, deter, disrupt and prosecute any efforts to interfere with our elections and the right of the American people, eligible voters to cast the ballot that counts.

Next question, Zipania?

Based on the sheer duration of the misconduct, do you expect potential other prosecutions, or at least the investigation that is ongoing, to actually involve other entities aside from TD Bank? Is it fair to say that perhaps the DOJ is also looking at other institutions that might have been caught up in this scheme? And just to confirm and to follow-up on the question in terms of individuals being prosecuted, when you say that we should expect more prosecutions, it could potentially target other TD Bank executives?

My general response to these kinds of questions is we don’t comment on ongoing investigations, but I was indicating that we would expect future cases against individuals, but I can’t comment any further than that.

Next question, David?

Can you talk a little bit about the fentanyl aspect of how this happened? We’ve heard about illicit drugs and we’ve heard about some of the cartels. I’ve heard Mexican cartels, Chinese money. Can somebody up here speak plainly, exactly? Was fentanyl involved in Chinese cartels or Chinese money laundering? It’s a little confusing.

I thought we were speaking plainly. That’s certainly-

You were a little.

Certainly what I was trying to do.

Just to make people understand exactly-

All right. I’m going to start with this, Deputy Secretary of the Treasury, and then the Head of the Criminal Division. I’ll let them answer this. [inaudible 00:36:42]

As part of our investigation into the activities of TD Bank, we found that money was being moved by a criminal known as David, who was moving money on behalf of drug money. Some of that money was related to fentanyl and our goal was to disrupt that. And as part of the penalty that we imposed based on FinCEN’s authorities, we both alleged that and we worked with the company to make sure that going forward, that type of activity wouldn’t happen in the future.

And the cartels were Mexican cartels working with Chinese money sources?

So I’ll let you rely on the documents that we’re going to present to talk about the networks here, but fundamentally, the thing that they were doing was they were using the US financial system to move money from drugs that were being sold here, including fentanyl. The normal scheme for this is oftentimes the precursor chemicals will come from China, go into Mexico, and then help create those drugs. The financial flows are often the reverse. The money will come from the United States, go to Mexico and some of it will go to China.

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What we’ve done here with regard to TD Bank is taken apart some of those flows, but as you’ve seen both from this podium but from the Treasury Department, we’ve taken a number of actions to go after fentanyl, many of them including sanctions, more than 300 sanctions from the Treasury Department. What we’re doing here is something that banks do with us on a regular basis through FinCEN exchanges and other networks to try and shut down the financial flows. And what we found was this individual was working very closely with a number of TD Bank employees, depositing large amounts of cash that were the proceeds of drug sales. And we’ve now taken apart that network and we’re committed to continue to do that going forward.

Thank you. I just was checking on the fentanyl aspect. Thank you guys.

Great. [inaudible 00:38:36]