Analysts Say Fines Could Rise as TD Bank Faces Additional Allegations

Toronto-Dominion Bank (TD Bank) reportedly could be facing fines of up to $4 billion in relation to money-laundering probes in the United States.

This estimate by analysts at Jefferies Financial Group is double the previous estimates, highlighting the severity of the potential impact on Canada’s second-largest lender, Bloomberg reported Wednesday (June 5).

The allegations involve instances in which TD Bank branch employees allegedly facilitated money laundering and bypassed anti-money laundering (AML) defenses, according to the report.

The U.S. Department of Justice, bank regulators and the Treasury Department are currently investigating TD Bank over allegations of money laundering and other financial crimes at several of its U.S. branches, the report said.

The investigations have revealed cases involving a former TD Bank branch employee in Florida who allegedly accepted bribes to help clients move millions of dollars to Colombia, as well as a former employee in New York who admitted to defrauding a customer by circumventing the bank’s compliance measures, per the report.

In a statement supplied to PYMNTS Tuesday (June 4), a bank spokesperson said: “TD, like all financial institutions, works with law enforcement to identify, stop and support the prosecution of criminals. When we became aware of these matters, we took action against these employees, coordinated efforts with the DOJ, and have supported their work to bring these criminals to justice. More broadly, where our program was ineffective, we have held those leaders accountable and are taking action to drive the changes and meet our obligations.”

These revelations have come after TD Bank initially set aside $450 million for potential regulatory fines, according to Wednesday’s Bloomberg report.

However, analysts believe that this amount may not be sufficient, considering the additional cases that have since been reported, the report said. The potential fines facing TD Bank have been estimated by various analysts, with previous estimates ranging from $600 million to $2 billion. One analyst suggested that the fine could exceed $3 billion and that TD Bank may face an asset cap on its U.S. business for five years.

Apart from the potential fines, TD Bank is also grappling with a proposed shareholder class-action lawsuit filed in Canada, according to Bloomberg report.

The lawsuit alleges that the bank misrepresented systemic deficiencies in its AML controls and how these failures would impact its U.S. operations, per the report.

TD Bank spokesperson Lisa Hodgins told Bloomberg: “TD’s disclosures and public statements are and have been accurate and consistent with our obligations under the securities laws and responsibilities to our shareholders. We will contest the assertions of these proposed class actions, which are without merit.”