TD Bank Sets New Record… for Being Utterly Terrible at Stopping Money Laundering

Welp… looks like TD Bank just found itself in the sh*tstorm of the century. And by “sh*tstorm,” I mean they just got slapped with a record-breaking $3 billion fine for money laundering. That’s right, Canada’s second-largest bank just set the new high score for getting its dirty little Wells Fargo on in the eyes of U.S. regulators. 

(Source: BBC) 

Interesting, more details please…

In short, TD Bank, aka the financial institution that’s supposed to protect the wonderful people of Canada’s money, just pleaded guilty to making it a whole lot easier for criminals to do the exact opposite. We’re talking bribes, overlooked criminal activity, and a whole lot of shady deals that made it “convenient” for bad actors to move their dirty money around. 

(Source: Giphy) 

And if you’re thinking, “Oh, it’s probably just a few bad apples,” think again. Apparently, TD has been running its own version of The Ozarks for nearly a decade - yes, ten friggin years of straight-up looking the other way while criminals waltzed into TD branches with bags of cash. 

(Source: CNN) 

For instance, in one eyebrow-raising example, a Queens man—who was already a convicted criminal, mind you—gifted bank employees $57,000 in gift cards in exchange for letting him launder $470 million. WTF? Yeah and if that wasn’t enough, apparently, this was such common knowledge at TD that employees were joking about it. 

On the other hand, when confronted about this issue, TD’s Chief Executive Bharat Masrani had literally no choice but to grovel as he called it: “a sad day in our history.” (See: Worst thing to happen to Canada since Drake’s “Freak Off” parties - which just so happened to be inspired by Diddy). 

(Source: Giphy) 

Which is why now, TD Bank is officially the proud recipient of the largest fine ever slapped on a bank for failing to stop money laundering in the U.S. As if the $3 billion fine wasn’t enough, the U.S. Office of the Comptroller of the Currency (OCC) decided to slap TD Bank with an asset cap. Translation: TD Bank isn’t allowed to grow beyond its current size of $434 billion in assets until the government decides it’s gotten its sh*t together. In fact, Wells Fargo had the same kind of “financial castration” happen back in 2018 that they’re still recovering from. 

(Source: Reuters) 

To add insult to injury, the market came for TD Bank with curse words and pitchforks in hand. The stock tanked 6.42% on the day the news broke. Which for a bank, that’s a pretty brutal punch to the gut. And now, TD Bank’s year-to-date performance is sitting at a lovely -7.52%. Meaning investors are bigly worried… especially with the settlement, the asset cap, and the regulatory drama will all be a massive drag on TD’s future growth and profitability.

(Source: Market Watch) 

Now keep in mind, this fine is just the tip of the iceberg. TD Bank is now under the watchful eye of an independent monitor who’ll be taking notes on how they handle their anti-money laundering efforts going forward. 

In the end though, TD Bank’s scandal is just another notch in Wall Street’s greed belt. However, this is a stark reminder that prioritizing growth over compliance, might not be the absolute best strategy in 2024. Because, if you’re too busy counting your profits to notice the criminals walking through your doors with bags of cash, you could end up with more than just a friggin slap on the wrist.

(Source: Giphy) 

So with that said, unfortunately… We have another Wells Fargo on our hands. And this asset cap will have TD Bank stuck at a measly size (for the foreseeable future), giving competitors plenty of time to eat their lunch. Whereas, the banks are going to have to work overtime to rebuild trust with regulators, investors, and customers. And with a $3 billion hole in their wallet, it’s not going to be a stroll in the park by any means. 

But hey, if they can clean up their act, maybe they’ll come out stronger on the other side. Maybe. In the meantime though, the reputational damage is done, and the King of Slime (Wells Fargo) just got itself a new member of the club: Hello TD Bank, and goodbye trust. 

As always, stay safe and stay frosty, friends! Until next time… 
 

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Stocks.News does not hold positions in companies mentioned in the article.