On October 10, 2024, TD Bank was fined $1.8 billion by the U.S. Department of Justice and $1.3 billion by the Financial Crimes Enforcement Network (FinCEN), totaling $3.09 billion, for violations of the Bank Secrecy Act (BSA) and deficiencies in its anti-money laundering (AML) programs. This marks the largest fine ever under the BSA. TD Bank admitted to failing to meet its AML obligations, which led to significant illicit money flows, resulting in this substantial penalty after a nine-month investigation.
Suspicious Transactions
FinCEN reported that TD Bank processed over 2,000 transactions for a company labeled as “Client Group C,” purportedly involved in financial and real estate sales. Client Group C falsely claimed its annual sales wouldnt exceed $1 million, but it transacted over $1 billion through TD Bank. Notably, 90% of the funds came from UK-based cryptocurrency exchanges and were transferred to digital asset providers in Colombia, involving high-risk sectors and countries. Despite numerous suspicious transactions and red flags, TD Bank failed to report this activity until multiple law enforcement inquiries regarding Client Group C were raised.
Significant Crypto Sector Penalties
This case is not isolated. In 2022, Kraken was fined $30 million by the U.S. Securities and Exchange Commission (SEC) for not registering as a securities issuer. That same year, BitMEX was fined $100 million by the Commodity Futures Trading Commission (CFTC) for inadequate AML measures. Binance also faced penalties exceeding $400 million for AML violations and failing to conduct proper customer due diligence.
As the crypto industry evolves and regulations improve, major platforms are encountering significant financial penalties due to compliance issues, underscoring the need for more rigorous customer due diligence to ensure regulatory adherence.