TD probe tied to laundering drug cash, Journal says

Trading-Revenue Surge Gives A Boost To Canadian Banks' Earnings
The Toronto-Dominion (TD) financial institution headquarters within the monetary district of Toronto, Ontario, Canada, on Friday, March 1, 2024. A rise in buying and selling income gave Canada’s huge banks a lift throughout 1 / 4 largely dominated by bigger loan-loss provisions and rising credit score stress. Photographer: Chloe Ellingson/Bloomberg

Chloe Ellingson/Bloomberg

(Bloomberg) –A U.S. law-enforcement probe into Toronto-Dominion Financial institution’s inside controls is tied to the laundering of lots of of thousands and thousands of {dollars} in proceeds from unlawful drug gross sales, the Wall Road Journal reported. 

The U.S. Division of Justice launched an investigation after discovering proof of a drug-money-laundering operation in New York and New Jersey, the Journal mentioned Thursday, citing court docket paperwork and folks accustomed to the matter. There are allegations that the criminals bribed Toronto-Dominion staff in that case and at the least one different, the newspaper mentioned. 

Toronto-Dominion disclosed final yr that it was underneath investigation by the division. Canada’s second-largest lender additionally faces probes by three U.S. regulators over its dealing with of suspicious buyer transactions. The financial institution has put aside an preliminary $450 million with respect to only a type of regulatory probes, it mentioned earlier this week, noting that it may’t estimate the ultimate dimension of any fines or different penalties it’d face tied to the anti-money-laundering investigations.

Toronto-Dominion’s shares dropped after the Journal report Thursday afternoon, and closed down 1.7%. 

“Criminals always search to make use of banks to launder cash. Regrettably, our US AML program didn’t successfully thwart these actions. That is unacceptable, and we should and we’ll do higher,” Toronto-Dominion spokeswoman Lisa Hodgins mentioned in an emailed assertion to Bloomberg Information. “As beforehand disclosed, we’ve got been and proceed to cooperate with legislation enforcement and our regulators. A complete effort is underway to strengthen our AML program, together with investments in expertise, instruments and know-how.”

Bribery Allegations

The Journal cited a prison case that included the laundering of at the least $653 million in proceeds from drug gross sales. Da Ying Sze, a Queens, New York, man pleaded responsible in February 2022 to conspiring to commit cash laundering and bribing a financial institution worker, amongst different prices.

“Sze routinely accepted illicit proceeds in money and deposited the money into monetary establishments in New York, New Jersey, Pennsylvania and elsewhere, using financial institution accounts within the names of shell firms and conspirators,” in response to a assertion on the time from the US Lawyer’s Workplace for the District of New Jersey, which mentioned that Sze obtained a payment of about 1% to 2% of the money laundered.

The assertion would not identify any particular financial institution. The Journal, citing folks accustomed to the matter, mentioned that the investigation targeted on the cash launderers’ use of 1 specific financial institution, and it was Toronto-Dominion. 

“From 2020 by way of 2021, Sze routinely offered present playing cards and different issues of worth to staff of at the least one monetary establishment in reference to monetary transactions, in search of to corruptly affect monetary establishment staff to supply Sze with particular advantages and to keep away from suspicion and reporting of his uncommon monetary transactions,” the US Lawyer’s Workplace mentioned.

The workplace declined to touch upon Thursday. Hodgins, the Toronto-Dominion spokeswoman, mentioned she could not reply particular questions concerning the financial institution’s involvement, if any, in that case.

The Journal additionally cited the beforehand reported case of Oscar Marcelo Nunez-Flores, a former Toronto-Dominion department worker in New Jersey who was charged in October with accepting bribes to facilitate thousands and thousands of {dollars} in cash laundering tied to drug proceeds. That case stays in court docket.

An lawyer for Nunez-Flores did not instantly reply to a request for remark Thursday.       

Toronto-Dominion’s $13.4 billion deal to purchase Memphis-based First Horizon Corp. was known as off a yr in the past after it turned clear that the Canadian financial institution could not get well timed regulatory approval for the deal.

Individually, the Monetary Transactions and Studies Evaluation Centre of Canada introduced a C$9.2 million ($6.7 million) superb in opposition to Toronto-Dominion on Thursday. The penalty adopted an investigation that discovered a number of administrative violations of Canada’s anti-money-laundering and terrorist-financing legal guidelines. That probe did not contain prison allegations.

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