TD Bank, one of the largest financial institutions in the US, has come under intense crypto scrutiny after being hit with the largest penalty ever imposed under the Bank Secrecy Act (BSA).
The $3.09 billion fine stems from allegations of failing to report suspicious activities, including significant cryptocurrency-related transactions.
The US Department of Justice (DOJ) and the Financial Crimes Enforcement Network (FinCEN) revealed that TD Bank processed billions of dollars through questionable accounts, raising concerns over the bank’s compliance practices in dealing with digital assets.
What Really Went Wrong?
In a report, FinCEN pointed out that TD Bank failed to properly monitor transactions for a specific client called “Customer Group C.” The unnamed company, which claimed to operate in sales finance and real estate, allegedly misled TD Bank about the volume and nature of its international transactions.
While Customer Group C initially reported that it would have transactions under $1 million annually, the company processed over $1 billion through TD Bank, much of it involving cryptocurrency. This discrepancy, combined with links to high-risk jurisdictions, drew the attention of US authorities.
According to FinCEN’s findings, the banking giant processed over 2,000 transactions for Customer Group C in just nine months. The firm brought in 90% of its funds from a UK-based crypto exchange and sent 60% to Colombian financial institutions involved in digital assets.
Customer Group C’s activities far exceeded the scope of what they initially declared during their onboarding with TD Bank, and they expanded their dealings into high-risk regions like China and the Middle East.
Despite these suspicious transactions and red flags related to risky jurisdictions and fast fund movements, TD Bank reportedly failed to report these transactions promptly. After receiving multiple law enforcement inquiries about Customer Group C, the bank only started flagging the activity.
FinCEN noted that TD Bank had some internal policies for monitoring transactions involving digital assets, but these controls were not adequately enforced in this case. As a result, millions of dollars in suspicious crypto transactions went unreported for months.
The Penalty
As of last week Thursday (October 10), TD Bank pled guilty to violating the Bank Secrecy Act and money laundering laws. The bank agreed to pay $1.8 billion in fines as part of a settlement with the DOJ, and FinCEN imposed an additional $1.3 billion penalty.
According to the report, the combined $3.09 billion fine represents the largest penalty ever imposed under the BSA. As part of the agreement, TD Bank will also face a four-year monitorship to ensure it implements better compliance measures in the future.
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