Canada's Second Largest Bank Faces Billions In Fines Amid Money-Laundering Probe

Financial regulators are poised to impose hefty fines on Canada’s second-largest bank Bank for its alleged involvement in money-laundering schemes. Analysts project that the penalties could soar into the billions, marking a significant blow to the bank’s reputation and operations. TD Bank could face fines totaling $2 billion, as disclosed in a note to clients, The Toronto Star reported.

These anticipated penalties, both monetary and non-monetary in nature, are expected to echo throughout the bank’s operations. According to the Canadian newspaper, TD Bank is not alone in facing scrutiny over money laundering. Other major banks in the country, including CIBC and RBC, have recently incurred fines from the country’s financial crime regulator for lapses in anti-money laundering measures.

The latest blow to TD Bank’s reputation stems from an ongoing probe by the US Justice Department into allegations that Chinese drug traffickers exploited the bank’s services to launder proceeds from fentanyl sales. Earlier, The Wall Street Journal reported that these traffickers allegedly bribed TD Bank employees to facilitate their illicit transactions. “Canada’s second largest bank TD Bank is now caught in a major drug money laundering scandal. Could face billion of dollars in fines. Lesson: once you encourage bad behaviour in one field, it will show up all other areas,” Sanjeev Sanyal, the Principal Economic Advisor to the Government of India, said in a post on X.

The revelations of potential money laundering ties have cast a shadow over TD Bank since last spring when US regulators halted the sale of First Horizon Bank to TD due to concerns over suspicious customer transactions. Despite the ongoing probe, TD Bank has remained relatively tight-lipped about the ongoing investigations until recently. Earlier in April, TD Bank disclosed setting aside $450 million in provisions to cover potential penalties imposed by US regulators.

Moreover, Canada’s financial crime watchdog, Fintrac, slapped TD Bank with a $9.2 million penalty for failing to comply with anti-money laundering and terrorist financing measures. Fintrac revealed that TD Bank had neglected to report suspicious transactions tied to illicit activities, a violation for which the bank has already paid the fine in full.