Banking | Oct 11, 2024
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TD Bank CEO Bharat Masrani to Retire After $3 Billion Money Laundering Fine
TD Bank hit with $3 billion penalties for anti-money laundering (AML) compliance violations, the largest ever for this type of infraction. As a result, TD bank’s longtime CEO, Bharat Masrani, has announced plans to retire by April 2025. So what went wrong? Well TD let drug cartels launder more than $670 million through the bank between 2018 and 2024. Masrani’s exit reflects the bank’s bigger issues with reputation, compliance, and any hopes at further U.S. expansion.
- Bharat Masrani, TD Bank’s CEO for 10+ years, has accepted full responsibility for the bank’s AML failures that happened under his direction. “I accept full responsibility for the anti-money laundering issues we face, which occurred during my tenure as CEO,” Masrani said in a statement. He’s set to retire from his role in April 2025 and is transitioning.
- $3 billion historic fine for money laundering failure is the highest in U.S. banking history, and is broken down into $1.3 billion to The Treasury Department’s Financial Crimes Enforcement Network, and another $1.8 billion to the U.S. Department of Justice.
See: TD Bank’s Money-Laundering and Bribery Scandal
- As part of a planned leadership transfer, Masrani will be replaced by Raymond Chun, a former senior executive in TD Bank’s Canadian personal banking sector who hasn’t been directly involved in TD’s U.S. business nor connected with any AML concerns . In November 2024, he will assume the role of Chief Operating Officer, and by April 2025, he will assume the role of CEO.
- The money laundering investigation has forced TD bank to stall its U.S. expansion plans and cancel its agreement to acquire Tennessee-based First Horizon Corp. TD also now faces restrictions in the U.S. that limit its business growth.
OSFI Statement on TD Bank
The Superintendent of Financial Institutions, Peter Routledge, issued a statement recognizing the seriousness of TD Bank’s anti-money laundering infractions as exposed by U.S. authorities. He underlined the substantial risks posed by TD Bank’s shortcomings and urged prompt action to resolve them while emphasizing the need for good management and compliance procedures.
Why It Matters
TD Bank will need to rebuilt trust with both regulators and consumers which will slow if not hamper it’s growth and reputation while competing in the highly competitive U.S. markets, under new leadership.
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