TD Bank Allegations by FinCEN

The Financial Crimes Enforcement Network (FinCEN) alleged that TD Bank failed to report suspicious activity from an unnamed customer group involved in international cryptocurrency transactions.

FinCEN asserted that TD Bank processed over 2,000 transactions from a firm referred to as "Customer Group C," which was described as "purportedly operating in the sales finance and real estate industries" over a nine-month span. Customer Group C misrepresented its intended international wire activity to TD Bank, claiming it would not exceed $1 million in annual sales, while actually conducting over $1 billion in transactions through the bank.

Moreover, Customer Group C sourced 90% of its funds from a UK-based cryptocurrency exchange and sent 60% of its funds to Colombian financial institutions offering digital asset services. During its onboarding, Customer Group C had not listed Colombia as a target jurisdiction and engaged with high-risk industries and firms in China and the Middle East.

FinCEN reported that despite numerous suspicious transactions and evident 'red flags' related to high-risk jurisdictions and rapid fund movements, TD Bank did not proactively report this suspicious activity until multiple law enforcement inquiries were made about Customer Group C.

While the bank had some written policies regarding transactions with digital assets, FinCEN noted that there was no evidence of enhanced controls being applied to Customer Group C’s significant dealings with virtual asset service providers.

On October 10, TD Bank pled guilty to violations of the Bank Secrecy Act and money laundering, resulting in $1.8 billion in penalties imposed by the United States Department of Justice. Additionally, FinCEN levied a $1.3 billion penalty and mandated a four-year monitorship on the bank for the same infractions. The total of $3.09 billion marks the "largest penalty ever imposed under the BSA."