TD Bank has agreed to pay $3 billion in fines to the U.S. government and will plead guilty to criminal charges for failing to adequately prevent money laundering activities. The financial penalties will be split between U.S. banking regulators, the Department of Justice and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
The deal, expected to be announced later today, includes an asset cap imposed on the bank, which will limit its ability to grow in the United States. The development comes as TD Bank, Canada’s second largest bank and tenth largest in the United States, has been exploring expansion opportunities in the country.
The asset cap is an important regulatory measure that will impact TD Bank’s strategy, particularly after its decision last year to terminate a $13 billion acquisition of First Horizon, a listed U.S. regional lender under the symbol NYSE:FHN. The termination of this agreement came shortly after TD Bank revealed that it was under investigation by regulators and law enforcement.
In anticipation of the deal, TD Bank has already taken steps to address issues raised by the investigation. The bank allocated $3 billion to cover expected penalties, invested millions in improving its compliance programs and laid off several employees at its U.S. branches. Additionally, TD Bank has named a new CEO from its Canadian personal banking division, signaling a change in leadership from those potentially linked to the scandal.
The agreement with US authorities also stipulates that TD Bank will be subject to independent oversight to ensure compliance with regulatory requirements in the future. This resolution will close the chapter of investigations carried out by the Department of Justice, the Office of the Comptroller of the Currency (OCC) and FinCEN into the bank’s past practices.
Reuters contributed to this article.
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