TD Bank (TD) saw a sharp decline in its shares on Thursday as the bank admitted its guilt and agreed to pay more than $3 billion in penalties to settle U.S. allegations of failing to check money laundering involving drug cartels. U.S. Attorney General, Merrick Garland, condemned the bank saying, "By making its services convenient for criminals, TD Bank became one. Today it made history, becoming both the largest U.S. bank to admit to Bank Secrecy Act program failures and the first to plead guilty to a conspiracy to money launder."
To settle these charges, TD consented to pay upwards of $1.8 billion to the Justice Department (DOJ), and a $1.3 billion fine to the Financial Crimes Enforcement Network of the Treasury Department. Furthermore, the bank accepted restrictions imposed by the Office of the Comptroller of the Currency (OCC) regarding the expansion of its U.S. retail operations.
TD Bank's outgoing CEO, Bharat Masrani, apologized for the bank's infractions and promised to adopt necessary changes. Masrani noted, "We have taken full responsibility for the failures of our U.S. Anti-Money-Laundering program and are committed to enact necessary improvements." He added that it was a difficult time for the bank and addressed that these shortcomings occurred under his tenure.
In August, Masrani mentioned that the bank was coordinating with U.S. regulators and law enforcement to rectify these issues, and last month announced that he will step down from his CEO position in April 2025, with a succession plan unveiled.
The bank incurred an unexpected loss in the third quarter as it earmarked billions for the impending fines related to the investigation into its anti-money-laundering procedures. Following these events, TD Bank's shares dropped past 5% on Thursday afternoon, settling at $59.54. The bank's stocks have seen an overall 8% decline this year.