Prime Minister Justin Trudeau says the federal government is “concerned” about the actions of TD Bank’s U.S. subsidiaries that led to a historic US$3-billion plea deal to settle money laundering charges this month.
Trudeau made the comments during question period in the House of Commons Wednesday when asked by NDP MP Don Davies what the Liberals have done to “address repeated criminal actions of TD Bank.”
“We’re of course very concerned by the actions of TD Bank in the United States,” the prime minister responded.
“We make sure every single day that banks in Canada behave by following all the rules. We have continued to strengthen financial oversight and we are making sure there is full accountability for those responsible for this wrongdoing in the United States.”
The comment appear to be the first public acknowledgement by Trudeau or any minister of the case, which saw TD plead guilty to violating a U.S. law aimed at preventing money laundering — the largest bank ever to do so.
At the time the settlement was announced, Canada’s superintendent of financial institutions Peter Routledge said in a statement the information disclosed in the case was “serious” but could not comment on the affairs of any Canadian federally regulated financial institution.
The U.S. government had accused TD of ignoring multiple red flags from high-risk customers and creating a “convenient” environment for bad actors to exploit. TD failed to monitor over US$18 trillion in customer activity for about a decade, enabling three money laundering networks to transfer illicit funds through accounts at the bank, U.S. authorities said.
In addition to the more than US$3-billion fine, the plea deal included a rare asset cap on TD’s U.S. business interests, which is typically reserved for severe cases. The penalty dealt a major blow to TD, which is the 10th largest bank in the U.S. and was planning to expand further.
Some U.S. politicians said the penalties didn’t go far enough, including U.S. Senator Elizabeth Warren, who said it “lets bad bank executives off the hook for allowing TD Bank to be used as a criminal slush fund.”
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The plea deal has also sparked scrutiny over Canada’s relatively modest penalties for similar activity.
In Canada, Fintrac can level a maximum fine of $500,000 for each very serious reporting violation, or it can refer violations to potential criminal prosecution.
In contrast, the massive American fine came in part from U.S. rules that allow regulators to fine banks up to US$500,000 for each day they lack a functioning anti-money laundering program.
The limited fines available to Fintrac means the $9.2 million penalty it imposed on TD earlier this year was the largest it had ever issued.
Fintrac said in a statement that along with its record penalty against TD, it also required the bank to develop an action plan to address its deficiencies, and the regulator may levy additional penalties if the bank doesn’t follow through with its plan.
TD has said it is making the investments, changes and enhancements required to deliver on commitments regarding its anti-money laundering program. Incoming CEO Ray Chun told investors on a conference call on the day the U.S. plea deal was announced that TD “will make the necessary changes to put the bank on a stronger foundation” and “meet our commitments to our regulators.”
The federal government undertook public consultations last year on ways to improve and strengthen Canada’s anti-money laundering regime, and boosted regulatory requirements for casinos and other non-bank entities earlier this year.
The finance department told the Canadian Press in a statement that the government has zero tolerance for financial crimes, and is continuously working to improve Canada’s ability to combat financial crime.
A spokesperson said the government has introduced a significant number of measures to strengthen Canada’s money laundering oversight, including increasing information-sharing, and since 2019 has invested close to $379 million to fight financial crimes.
Global News has reached out to Finance Minister Chrystia Freeland’s office for additional comment following Trudeau’s remarks.
Routledge, speaking at a risk conference earlier in October, acknowledged money laundering was “a risk that is more significant than I appreciated three years ago when I started the job” and that mounting incidents had forced his office to study the matter more closely.
— with files from the Canadian Press
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