Canadian bank is being investigated over Bank Secrecy Act and AML program
TD Bank Group has taken an initial provision of US$450 million after discussion with one of regulators investigating the Canadian bank’s Bank Secrecy Act/Anti-Money Laundering program.
An announcement made Tuesday after the closing bell referred to the “previously disclosed regulatory and law enforcement investigations” which are part of several factors that could limit the bank’s U.S. expansion strategy.
In Tuesday’s statement TD acknowledged that it is in ongoing discussions with three regulators in the United States including the one referenced (but not named) in the statement and the Department of Justice.
It also said that it expects additional monetary penalties.
“This provision does not reflect the final aggregate amount of potential monetary penalties or any non-monetary penalties, which are unknown and not reliably estimable at this time,” the statement clarified.
Analysts have suggested that the penalties could run to $1 billion.
The bank accepts that its AML program was not sufficient to effectively monitor, detect, report, and respond to suspicious activity, but says that work is underway to strengthen the program and remedy the deficiencies.
“TD is a strong institution with the capital, liquidity, and capacity to fund the critical effort currently underway to strengthen its AML program, invest in the business, and continue to serve its customers and clients with excellence,” the statement said.
The scrutiny by U.S. regulators has significantly disrupted the bank's growth strategy – ultimately derailing the bank’s plan to acquire Memphis-based First Horizon Corp. – and also adversely affected its stock. It has also heightened discussions about potential successors to chief executive officer Bharat Masrani.
