TD fired more than a dozen staff over AML failings, WSJ reports

TD Banking Group’s CEO said that not thwarting the money laundering activities of criminals targeting financial institutions is ‘unacceptable’ as a media report says staff have been sacked over the matter.

The Canadian big six bank is under investigation by several U.S. authorities relating to its Secrecy Act/Anti-Money Laundering program which could cost the banking group as much as $2 billion in penalties according to some analysts.

The Wall Street Journal cites a person familiar with the matter in reporting that TD has fired more than a dozen staff as a result of the failings to effectively monitor detect, report and respond to suspicious activity which have led to probes by the U.S. Department of Justice and three regulators, and ultimately halted the Canadian bank’s planned takeover of Tennessee-based First Horizon Corp. last spring.

It’s reported that some of the employees that have been sacked were leaders in the bank’s anti-money-laundering function and others were branch employees that had been found to have violated TD’s code of conduct. In some cases, employees were believed to be facing criminal charges.

Wealth Professional has contacted TD Banking Group for comment.

TD reported its second quarter results this week and noted a $615 million charge in connection with discussions with one of the U.S. regulators conducting AML investigations. It also stated in its earnings report:

“The Bank has been cooperating with U.S. regulators and authorities in good faith for many months and is working diligently to bring these investigations to resolution so that investors can have more clarity. A comprehensive overhaul of TD's U.S. AML program is well underway and will strengthen our program globally.”

Recently, John Aiken of Jefferies says that the Canadian big six bank could face years of lost potential growth south of the border and a problem that could well take longer to remedy than first thought.

“With the bank allegedly a focal institution in a drug money-laundering scheme, the worst-case scenario has become more likely with TD potentially entering a lost decade,” Aiken opined. “Growth in the U.S. will likely be constrained and the timeline for a fix is extended by several years.”