TD Bank Faces Record Penalty of $9.2 Million from Canada’s Anti-Money Laundering Regulator

In a landmark decision, the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC) has imposed a penalty of nearly $9.2 million on TD Bank for inadequate anti-money laundering (AML) controls. This is FinTRAC’s largest-ever administrative monetary penalty, coming as TD Bank disclosed a provision of US$450 million for potential penalties in the United States.

TD Bank’s AML Lapses

The lapses in TD Bank’s AML controls span the period between 2011 and 2015. During this time, the bank reportedly failed to appropriately analyze and report over 500,000 transactions, which violated the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. These transactions involved both domestic and international dealings.

FinTRAC’s Investigation and Findings

The penalty follows an investigation by FinTRAC into TD Bank’s adherence to Canada’s AML regulations. FinTRAC discovered that the bank had neglected to implement adequate controls to identify and report suspicious transactions, allowing potential money laundering and other illicit activities to go undetected.

Previous Scrutiny and Consequences

TD Bank had previously faced criticism for its AML controls, having paid a $1.3 million penalty in 2019 for similar deficiencies. With a total of $10.5 million in penalties in the last three years, the bank now faces significant pressure to bolster its AML defenses.

The Importance of AML Compliance

The enforcement actions against TD Bank underscore the heightened importance of financial institutions’ role in identifying and preventing financial crimes. As governments and regulators ramp up their efforts to combat money laundering, banks must invest in robust AML systems and processes to evade penalties and preserve reputations.

Regulatory Challenges

This development also underscores the challenges faced by Canadian regulators as they balance numerous investigations and enforcement actions while preserving the stability and integrity of the financial system.

Quotes from FinTRAC

FinTRAC’s director, Alana Armstrong, emphasized, “This administrative monetary penalty is a significant step towards ensuring that financial institutions comply with their obligations under the Act, thereby reducing the risk of money laundering and terrorist financing activities in Canada’s financial sector.”

Stay tuned for further updates on this developing story.