TD Bank: The Bank Knew What Its Anti-Money Laundering System Could Not See

The TD Bank money laundering case included a $1.3 billion Financial Crimes Enforcement Network civil penalty for failures in transaction monitoring and reporting. The bank’s criminal admissions describe employees warning about suspicious cash, managers leaving entire payment channels outside monitoring, and a budget policy that kept necessary improvements waiting. For someone inside a bank, the revealing documents are familiar: coverage assessments, staffing requests, branch messages and reports that said a problem would be fixed.

TD Bank’s Bank Secrecy Act Violations

In TD Bank’s case, the Bank Secrecy Act violations concerned an inadequate anti-money laundering program and inaccurate currency transaction reports. On October 10, 2024, TD Bank pleaded guilty to a conspiracy involving those failures and money laundering.

TD Bank’s criminal plea Statement of Facts admits that executives knew about persistent deficiencies and that the failures allowed three money laundering networks to transfer more than $670 million through TD accounts. The holding company oversaw the bank’s anti-money laundering program, including through its audit committee.

The Financial Crimes Enforcement Network’s separate civil order found failures to maintain an adequate anti-money laundering program and to report suspicious activity and currency transactions accurately and on time.

TD Bank’s AML Transaction Monitoring Gaps

The red flags for AML transaction monitoring at TD included excluded payment categories, unchanged detection rules, inaccurate coverage assessments and unresolved investigation queues. In its criminal plea, TD Bank admitted that the bank introduced no new monitoring scenarios and made no substantive changes to existing ones from at least 2014 through late 2022, despite known risks.

92%

of TD Bank’s total transaction volume went unmonitored from January 1, 2018, to April 12, 2024, according to the Justice Department’s account of the criminal case.

Approximately $18.3 trillion in transaction activity.

Justice Department, TD Bank guilty-plea announcement

The civil order found that TD knew it lacked the transaction codes and scenarios needed to monitor remote deposits as early as 2011.

The domestic automated clearinghouse gap was equally explicit. FinCEN found that anti-money laundering employees proposed a monitoring scenario in 2012 and a senior manager rejected it. An internal assessment in 2017 recorded “no active ACH monitoring”.

Later assessments claimed automated clearinghouse coverage even though the system covered only international automated clearinghouse payments. The civil order found that the bank had not mapped or tested the transaction types to verify those claims. The description of the system improved before the system did.

The exclusions also reached peer-to-peer payments. FinCEN found that the missing domestic automated clearinghouse coverage left non-Zelle payments, such as Venmo and PayPal, unmonitored. When TD updated transaction codes, it concentrated on Zelle and left other providers outside the specific monitoring scenarios.

The criminal plea identifies another gap in transactions involving high-risk countries. TD maintained an updated risk list, but its automated monitoring used only a narrower subset that had not been updated after 2013. Recognizing a country’s risk did not ensure its transactions reached the relevant monitoring rules.

TD Bank AML Transaction Exclusions: Internal Warnings Met a Flat Budget

In the criminal plea’s Statement of Facts, TD Bank admitted that senior executives expected budgets, including anti-money laundering, to stay flat from year to year while the business grew. The bank called this its “flat cost paradigm”.

The civil order found that anti-money laundering leaders treated working within that budget as an accomplishment in their self-assessments. Requests for resources did not reach senior management or the boards promptly, although the U.S. parent board knew inadequate staffing was a root cause of persistent problems.

The queue made the consequences visible. In 2018, according to FinCEN, TD had more than 70,000 backlogged detection alerts and roughly 3,000 aged subpoena responses and further-investigation cases. When a senior executive questioned whether the program had enough resources, the global head of anti-money laundering responded in part by suggesting less investigative rigor and less analyst time per investigation. The proposed saving came out of the work needed to understand the transactions.

The backlog continued into account closures. FinCEN found that customers awaiting closure received more than $5 billion from 2018 to 2021 after an anti-money laundering employee requested closure. An Ecuador-based brokerage continued transacting without restriction for almost a year after investigators asked to close its accounts. Identifying an unacceptable risk did not stop the account from receiving money.

A 2024 paper from the Wharton Initiative on Financial Policy and Regulation, Anti-Money Laundering: Opportunities for Improvement, describes the wider incentive problem: compliance officers can see themselves as working alongside law enforcement while others in the institution see their work as an expense to minimize.

At TD, the staffing memos and unresolved queues give that institutional conflict a concrete form.

The Replacement System Exposed the Old System’s Gaps

FinCEN found that testing a replacement system revealed roughly $1 trillion in additional wire activity over a five-and-a-half-month test period. Senior anti-money laundering management saw the difference. Executives then received repeated presentations comparing the systems, yet the bank did not apply interim controls or notify regulators during that period. A future technology project became the reason a known present gap could wait.

That cost decision has parallels elsewhere. Under its deferred prosecution agreement, HSBC admitted understaffing its anti-money laundering operation and leaving large affiliate transaction populations unmonitored. Its factual attachment described a staffing freeze intended to reduce costs and improve return on equity. In its guilty plea, Danske Bank admitted that its executive board canceled a centralized technology migration because it would be too expensive. Staffing and technology decisions determine what an institution can see long before a suspicious payment reaches an investigator.

How the Networks Used the Bank

The criminal plea’s Statement of Facts describes different ways to turn TD accounts into a laundering channel: cash deposited through nominees, connected jewelry-business shells and rapid ATM withdrawals in Colombia. Each depended on a different combination of missing controls and employee decisions.

Cash at the Counter, Gift Cards for Employees

In the criminal plea, TD Bank admitted that one network laundered more than $470 million through TD. Its operator used accounts opened in other people’s names, deposited bulk cash and moved the money out through official bank checks and wires. He distributed more than $57,000 in retail gift cards to bank employees to keep the transactions moving.

The person handling the cash was often neither the account holder nor an authorized signatory. Yet TD’s currency reports repeatedly identified the account holder and omitted the person actually conducting the transaction. The bank’s forms helped that happen by prepopulating account-holder information.

Employees could see the problem. The plea reproduces an email from one store manager to another:

The same admitted account describes an understaffed team handling internal unusual-transaction reports. The team curtailed repeat reports about certain customers unless their activity changed or continued beyond the specified period. Some branch employees took the instruction as a signal that the bank accepted the activity. A process meant to reduce the queue changed what employees thought they should report.

Jewelry Businesses With Connected Shell Accounts

TD Bank also admitted in the plea that a purported wholesale diamond, gold and jewelry business used connected shell-company accounts. TD knew the accounts shared signatories. Branch employees reported cash deposits that were excessive for that kind of business. By the time law enforcement prompted a suspicious activity report, nearly $120 million had moved through the bank.

The missing scenarios explain why the warnings mattered. TD had decommissioned a scenario aimed at large business cash deposits. Its rules for rapid movement of money also missed transfers between accounts within TD. The network could deposit cash into its main account and distribute it among its other TD accounts without triggering those alerts. The bank had identified the need for a remedy but never developed the scenario.

ATM Cards and Withdrawals in Colombia

The plea describes five TD employees helping networks open and maintain accounts used to launder approximately $39 million to Colombia. Their roles included retail banking, financial services and branch supervision. They supplied dozens of ATM cards and helped resolve obstacles such as account freezes.

The cash moved through U.S. accounts and came out quickly at Colombian ATMs. The admitted facts describe branches accepting passport images instead of requiring card signatories to appear in person, reusing identification across accounts and issuing up to 46 debit cards per business account despite a 15-card limit. Here, employee participation helped the network get through the controls that remained.

TD Bank’s Late SARs and Inaccurate CTRs

A suspicious activity report describes activity that meets the bank’s reporting standard for suspected wrongdoing. A currency transaction report records qualifying cash transactions and the people involved. In TD’s case, failures occurred at both stages: reports about suspicious activity arrived late, while cash reports left out the person moving the money.

The criminal plea admits that TD filed 564 materially inaccurate currency transaction reports for the cash network. FinCEN separately found that investigation backlogs caused the bank to file more than 6,000 suspicious activity reports late.

The civil order also describes investors defrauded through a purported real-estate company. TD began filing suspicious activity reports only after a law-enforcement inquiry, initially covering approximately 1% of the suspicious activity. Nearly half the suspicious transactions involved checks and check deposits, a channel the bank was not properly monitoring. The monitoring gap left investors’ money moving through the bank without the scrutiny it needed.

The Civil Penalties and the Asset-Growth Restriction

The Office of the Comptroller of the Currency imposed a $450 million civil penalty on TD Bank, alongside an asset-growth restriction in a separate order. The Federal Reserve’s $123.5 million civil assessment covered TD’s parent companies.

What FinCEN Required the Bank to Examine

FinCEN’s civil order required an independent monitor and reviews of the transactions, people and data behind the failures. Its suspicious-activity lookback covers activity from 2018 through completion of the phased replacement monitoring system. It expressly includes payment channels and transactions missed because monitoring scenarios were absent or paused.

The order also requires reviews of the anti-money laundering program, personnel involvement and failures to escalate. Its data review examines the quality of information, how it moves between systems and who is responsible for it.

Those requirements return to the central problem: which transactions entered monitoring, who understood the gaps, and what happened after the warning reached management. An insider’s knowledge can connect an apparently technical exclusion to the decision that kept it in place.

Whistleblower Rewards for TD Bank Insiders

The AML whistleblower law provides awards totaling 10% to 30% of qualifying government collections for eligible whistleblowers in covered cases where the government imposes more than $1 million in monetary penalties. Our whistleblower experts assess how the conduct you know fits the relevant program.

The False Claims Act has a separate whistleblower program. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Where the Warnings Went

If you saw a monitoring gap left open, a staffing request turned down or branch warnings cut off, speak with our whistleblower experts about what happened inside the bank. We build your strongest money laundering whistleblower case from the decisions and transactions you saw, and bring in money laundering whistleblower lawyers who understand bank controls and reporting failures. We stay beside you through the case, from the first account of what you saw to the pursuit of a recovery.