TD Bank, one of the largest financial institutions in the US, is facing intense scrutiny after being hit with a record-breaking penalty under the Bank Secrecy Act (BSA). The $3.09 billion fine, imposed by the US Department of Justice (DOJ) and the Financial Crimes Enforcement Network (FinCEN), is the largest ever imposed under the BSA. The penalty stems from allegations that TD Bank failed to report suspicious activities, including significant cryptocurrency-related transactions.
According to reports, TD Bank processed billions of dollars through questionable accounts, raising concerns about the bank’s compliance practices when dealing with digital assets. The focus of the investigation was on a specific client known as “Customer Group C,” which claimed to operate in sales finance and real estate. However, it was revealed that the company misled TD Bank about the volume and nature of its international transactions.
Initially, Customer Group C reported that it would have transactions under $1 million annually. However, the company processed over $1 billion through TD Bank, with a significant portion of the transactions involving cryptocurrency. This discrepancy, along with connections to high-risk jurisdictions, caught the attention of US authorities. FinCEN’s findings showed that TD Bank processed over 2,000 transactions for Customer Group C in just nine months, with the company receiving 90% of its funds from a UK-based crypto exchange and sending 60% to Colombian financial institutions involved in digital assets.
Despite the suspicious nature of these transactions and red flags related to risky jurisdictions and fast fund movements, TD Bank reportedly failed to report them promptly. It was only after receiving multiple law enforcement inquiries about Customer Group C that the bank started flagging the activity. FinCEN noted that while TD Bank had internal policies for monitoring transactions involving digital assets, these controls were not adequately enforced in this case, leading to millions of dollars in suspicious crypto transactions going unreported for months.
As a result of these violations, TD Bank pled guilty to violating the Bank Secrecy Act and money laundering laws. The bank agreed to pay $1.8 billion in fines as part of a settlement with the DOJ, and FinCEN imposed an additional $1.3 billion penalty. The combined $3.09 billion fine represents the largest penalty ever imposed under the BSA. In addition to the financial penalties, TD Bank will also face a four-year monitorship to ensure it implements better compliance measures in the future.
The incident has raised questions about the oversight and compliance practices of major financial institutions when it comes to dealing with cryptocurrency transactions. It serves as a reminder of the importance of robust monitoring and reporting mechanisms to prevent illicit activities in the digital asset space.