TD Bank, considered one of the biggest financial institutions within the US, has come under intense crypto scrutiny after being hit with the biggest penalty ever imposed under the Bank Secrecy Act (BSA).
The $3.09 billion nice 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 coping with digital assets.
What Really Went Incorrect?
In a report, FinCEN identified that TD Bank did not properly monitor transactions for a particular client called “Customer Group C.” The unnamed company, which claimed to operate in sales finance and real estate, allegedly misled TD Bank concerning the volume and nature of its international transactions.
While Customer Group C initially reported that it might have transactions under $1 million annually, the corporate processed over $1 billion through TD Bank, much of it involving cryptocurrency. This discrepancy, combined with links to high-risk jurisdictions, drew the eye of US authorities.
In keeping with FinCEN’s findings, the banking giant processed over 2,000 transactions for Customer Group C in only 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, they usually expanded their dealings into high-risk regions like China and the Middle East.
Despite these suspicious transactions and red flags related to dangerous jurisdictions and fast fund movements, TD Bank reportedly did not report these transactions promptly. After receiving multiple law enforcement inquiries about Customer Group C, the bank only began flagging the activity.
FinCEN noted that TD Bank had some internal policies for monitoring transactions involving digital assets, but these controls weren’t adequately enforced on this case. Because of this, thousands and thousands 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 a part of a settlement with the DOJ, and FinCEN imposed a further $1.3 billion penalty.
In keeping with the report, the combined $3.09 billion nice represents the biggest penalty ever imposed under the BSA. As a part of the agreement, TD Bank will even face a four-year monitorship to make sure it implements higher compliance measures in the longer term.
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