TD Bank Dismisses Over a Dozen Employees Following Anti-Money-Laundering Scandal

Internal Reorganization at TD Bank

Toronto-Dominion Bank, currently under investigation by the US Justice Department for an anti-money-laundering scandal, has instigated an internal reorganization. This has resulted in the dismissal of more than a dozen employees.

Reason for Dismissal

As reported by the Wall Street Journal, the employees were let go due to their failure to uphold the bank's anti-money-laundering standards. The source, who wished to remain anonymous, revealed that the dismissed employees were part of the bank's anti-money laundering function and staff working in US bank branches. These individuals had violated TD's internal code of conduct, which all employees are required to adhere to annually. Some employees faced criminal charges, while others were disciplined for lesser infractions.

Bank's Response

After TD's second-quarter financial results were announced at an investor conference, President and Chief Executive Bharat Masrani stated that an internal investigation into the failings was underway. He confirmed that employees responsible for the lapses had been dismissed. However, neither the bank nor the source provided further details regarding the exact number of dismissals or the identities of those dismissed.

Elizabeth Goldenshtein, a spokesperson for the bank, stated that the bank has significantly bolstered the leadership of its US anti-money-laundering function. She added that the bank has recruited experienced professionals to lead and revamp the anti-money-laundering programs to prevent such lapses in the future.

Justice Department Investigation

Earlier this month, the Wall Street Journal disclosed a Justice Department investigation into TD Bank's internal controls. The investigation focused on how Chinese drug gangs used the bank to launder money from US fentanyl sales. In response to one of these inquiries, the bank has set aside $450 million and anticipates further penalties.

Analysts Paul Gulberg and Ethan Kaye from Bloomberg Intelligence noted that the $450 million reserve for an anti-money laundering probe could potentially exceed that amount as it only addresses negotiations with one regulator.

Impact on TD Bank's Shares

TD Bank's shares listed in Canada fell by 1.3% in the session, marking a 7% decline since the Wall Street Journal reported on the DoJ probe earlier this month.

Bank's Cooperation with Authorities

President and Chief Executive Bharat Masrani stated, "Criminals are regularly targeting financial institutions and, in these cases, TD did not effectively thwart their activity. This is unacceptable. TD has been cooperating closely with the authorities to help them prosecute these criminals."

Closing Thoughts

This incident at TD Bank serves as a stark reminder of the importance of stringent anti-money-laundering measures in financial institutions. It highlights the potential repercussions of failing to uphold these standards, both for the individuals involved and the institution as a whole. What are your thoughts on this matter? Feel free to share this article with your friends and engage in a discussion. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.