U.S. Sen. Elizabeth Warren, pictured here at the Democratic National Convention in Chicago this year, says the U.S. Department of Justice failed to adequately hold TD Bank executives accountable for anti-money laundering failures.Mike Segar/Reuters
American Senator Elizabeth Warren is calling out the U.S. Department of Justice for failing to adequately hold Toronto-Dominion Bank TD-T executives accountable for anti-money-laundering failures.
In a Wednesday letter addressed to the DOJ, Ms. Warren said that while the Justice Department and banking regulators imposed severe fines and restrictions, they fell short by neglecting to directly charge the bank’s most senior executives.
In early October, Canada’s second-biggest bank became the first lender in U.S. history to plead guilty to conspiracy to commit money laundering after a decade of shuffling funds for criminal organizations and ignoring red flags and warnings from employees. TD is one of the top 10 largest lenders in the U.S. with more than 1,100 branches. The scope of its transgressions prompted U.S. authorities to impose rare penalties that limit the bank’s expansion ambitions in its largest growth market.
But Ms. Warren said that was not enough. The Justice Department allowed “this lawbreaking bank and its reckless leadership to escape the full scope of penalties that Congress determined is necessary to effectively deter future criminal acts,” she said in her letter.
“TD Bank‘s executives allowed TD Bank TD-T to act as a criminal slush fund and hurt hundreds of thousands of people. The details of this crime are egregious,” Ms. Warren said. “Between January, 2014, and October, 2023, TD Bank leadership knowingly presided over a criminally deficient anti-money laundering program while growing the bank such that its ‘risk profile increas[ed] significantly.’”
TD and the DOJ declined a request for comment from The Globe and Mail.
Ms. Warren’s letter, which was addressed to U.S. Attorney-General Merrick Garland and deputy attorney-general Lisa Monaco, was first reported by the media outlet American Banker.
When the DOJ unveiled the charges against TD in Washington in early October, the department said that it was prosecuting two TD Bank employees, and that there may be further charges ahead. “No one involved in TD Bank’s illegal conduct will be off limits,” Mr. Garland said at the time.
In response to a reporter’s question at the Washington news conference on whether the DOJ expects to prosecute any TD executives, Mr. Garland said that he couldn’t comment on an investigation that “it is continuing aggressively, and we do expect to see more prosecutions.”
Ms. Warren warned that if the DOJ does not adequately hold senior executives accountable, it will send a message that banks can put profit over compliance risks.
“Until and unless those executives who presided over TD Bank’s institutionalized money laundering are held accountable, banks will continue to factor enforcement fines into the cost of doing business, rather than approaching compliance with our money laundering laws with the seriousness it requires,” she said.
She also said that prosecutors allowed TD to evade criminal charges that would have triggered a bank “death penalty” provision, which provides the Office of the Comptroller of the Currency (OCC) with the authority to revoke a lender’s charter, forcing it to end its U.S. operations.
“In plain terms, if DOJ had charged TD Bank with the crime it committed – money laundering – the OCC would have been legally required to serve TD Bank with a notice of intent to terminate the bank’s charter and to hold a hearing to publicly discuss the merits of a charter revocation,” Ms. Warren said.
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The senator posed several questions to the DOJ, including asking for reasons why the department did not charge any senior executives. She requested a response by Nov. 15.
U.S. officials imposed more than US$3-billion in fines and a host of non-monetary penalties for breaches in TD’s anti-money-laundering program between January, 2014, and October, 2023 – a period that spans the length of chief executive officer Bharat Masrani’s tenure.
Mr. Masrani has said that he accepts responsibility for the failings. In September, the bank announced that the CEO will step down next year.
Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, has previously said that the details of the case are “serious.”
Last week, Prime Minister Justin Trudeau said that the federal government is “very concerned” about the issues that led to TD’s settlement with U.S. authorities.
“We are making sure that there is full accountability for those responsible for this wrongdoing in the United States,” Mr. Trudeau said during Question Period last Wednesday in response to a query from an opposition member.