TD Bank Begins AML Overhaul, Commits $1 Billion to New Protocols
Toronto-based TD Bank Group recently announced its plans to invest over $1 billion collectively to bolster its anti-money-laundering (AML) controls over the next two years, this following the firm’s receipt of a record $3.1 billion penalty and additional restrictions placed on the firm’s U.S. asset growth last year by multiple domestic regulators. The U.S. Justice Department, Financial Crimes Enforcement Network (FinCEN), and Office of the Comptroller of the Currency (OCC) issued respective, large-scale penalties against the financial services giant after ultimately discovering that the group’s American operations failed to implement adequate controls to detect and prevent money laundering between 2014 and 2023. These systemic inadequacies ultimately culminated in TD facilitating nearly $700 million worth of illicit transactions on behalf of bad actors of both domestic and foreign origin.
The bank’s AML deficiencies, which spanned over a 9+ year period, involved inadequate monitoring and flawed reporting systems that allowed criminal networks to exploit its U.S. operations. Over this time, the bank quickly developed into the institution of choice within U.S. borders to launder funds tied to the international drug trade. The Department of Justice (DOJ) probe into TD Bank’s internal controls ultimately led to the discovery of rampant abuse of the bank’s financial services by Chinese-backed crime groups and drug traffickers who were effectively using the TD’s domestic branches as tools to launder the proceeds of U.S. fentanyl sales. During this period, organized criminal syndicates based in China had heavily subsidized fentanyl precursor materials, later supplying these to materials to Mexican drug cartels who would ultimately traffic the illicit drugs across the border and into the United States – further propelling the opioid epidemic seen across North America over the past decade. With respect to these specific transgressions, one money laundering network processed more than $470 million through TD Bank via bulk cash deposits, many of which surpassed the $10,000 suspicious transaction reporting requirement seen in the United States. In the rare event that suspicious transaction reports were ultimately filed by TD bank employees in these cases, they often failed to properly identify the conductor of the transaction within these documents, liberating the individuals behind this illicit activity from risk of prosecution.
During their investigation, federal agents monitoring TD’s New York and New Jersey operations ultimately discovered a paper trail leading from TD to multiple Chinese syndicates, as well as evidence that TD Bank employees were bribed to either look the other way or directly partake in the laundering themselves. It was later found that a total of $39 million was laundered by five TD Bank employees in conspiracy with various criminal organizations, with these funds ultimately sent across international borders to Colombia for safe-keeping.2 To date, the Justice Department has charged over two dozen individuals implicated in these schemes, including two bank insiders. TD Bank’s plea agreement also requires continued cooperation in ongoing investigations of individuals involved in these transgressions.2
These eye-opening improprieties ultimately led to a collective $3.1bn penalty being levied against the bank that included $1.3 billion paid to the U.S. Treasury Department’s Financial Crimes Enforcement Network, a record fine for a financial institution, as well as an additional $1.8 billion to the U.S. Justice Department. The firm also pleaded guilty to Bank Secrecy Act and Money Laundering Conspiracy violations as part of the proceedings. Furthermore, the total assets of TD’s two US banking subsidiaries — TD Bank, NA and TD Bank USA, NA — were capped at their reported September 2024 level of $434 billion, with this figure enforced by the OCC. As of April 2025, TD has reduced its U.S. assets to $399 billion, achieving compliance with the cap through strategic loan sales and business wind-downs.
With respect to the bank’s progress in meeting the corrective requirements outlined by federal regulators, Leo Salom, head of TD’s U.S. banking operations, emphasized that significant improvements have already been made to mend their deficiencies and restore the firm’s prowess in the American market. “We remain on track with our planned remediation activities and are building the foundational AML program that we need for the years ahead.” The bank has already spent $196 million in the first half of 2025, with increased investments planned for the latter half to enhance training, analytics, and protocols. By the third quarter, TD is expected to deploy new machine learning technologies to improve their investigative efficiency and further strengthen their money management controls.1
TD’s major overhaul aligns with broader strategic adjustments matching current AML requirements in the U.S. As detailed in their 2025 Q2 earnings call, the firm highlighted that they have sold or run off $11 billion in U.S. loans and is winding down a $3 billion point-of-sale financing business. Additionally, the bank is restructuring its bond portfolio, selling low-yield securities to reinvest in higher-return options, anticipating a $500 million boost to net interest income by October 2025. A separate restructuring plan, costing $600-$700 million, aims to optimize real estate, streamline operations, and cut 2% of its global workforce, primarily through attrition. This is projected to yield $550-$650 million in annual savings, with $100 million expected in 2025. CEO Raymond Chun, who assumed leadership in February 2025 after Bharat Masrani’s departure due to the AML failures, said these changes will fund digital and AI advancements while enhancing relationship banking. They will also contribute to covering the projected $500+ million in annual costs for its anti-money laundering remediation efforts, with the also expected to double-down on these investments for the 2026 fiscal year. Part of this investment went towards appointing a new compliance monitor for its AML program. In February, TD named Guidepost Solutions as the monitor for its United States operations as part of their multi-year program aimed at closing their compliance loopholes and strengthening the bank’s internal controls.
While 2025 will be viewed as a transitional year for TD as it continues to address its identified AML shortcomings and improve its standing in the international banking sphere, the firm appears to be positioning itself for a significant bounce-back. By re-building the bank for the future, TD is aiming to both restore regulatory trust and drive sustainable growth. If its efforts prove successful, they could set the blueprint for future remediation efforts taken by its big-banking counterparts facing similar regulatory struggles – which bodes well for the health of the U.S. anti-crime regime.
Citations
- Leffert, Catherine. “TD to Spend $1B in 2-Year Span on Compliance Fixes.” American Banker, American Banker, 22 May 2025.
- “TD Bank Pleads Guilty to Bank Secrecy Act and Money Laundering Conspiracy Violations in $1.8B Resolution.” Office of Public Affairs, United States Department of Justice, 6 Feb. 2025.