TD Bank Bracing for $4 Billion Fine

TD Bank Bracing for $4 Billion Fine

September 15, 2024

TD faces a huge fine for failing to enforce anti-money-laundering requirements, writes Peter Watson.

The Toronto Dominion Bank is bracing itself for a $4 billion fine. The issue is its failure to follow strict rules against money laundering in some of its US bank branches.

Money-laundering as defined by the Investopedia website is “an illegal activity that makes large amounts of money generated by criminal activity, such as drug trafficking or terrorist funding, appeared to have come from a legitimate source.”

The goal of anti-money-laundering safeguards is to prevent or at least make it more difficult for criminals to convert money received through criminal activity to appear as legitimate and therefore can be spent freely.

These rules are critically important to all of us. Criminal activity is a business run by criminals that cause harm. We need strong enforceable laws and regulations to combat criminals.

Regulators follow the flow of money in financial institutions. Effectively they want to know the source of funds and if that source is legitimate.

You might see examples of this. If you sell your house and invest a large amount of money in any financial institution the question of that institution will be where the funds originated.

Once the institution knows it’s from the sale of the house, the money can be invested.

The anticipated amount of the Toronto Dominion Bank fine would make it the second largest in US history.

That is bad for TD but good for us all. We need to have strong regulations guarding us against criminals who generate large amounts of funds through illegal activities.

This has been an embarrassing and costly issue for Canada’s second-largest bank. It will also be a reminder to all other financial institutions to be vigilant against all money laundering activities.

Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com