TD Bank’s hand slapped after plea in money laundering conspiracy

On Thursday, the Department of Justice and regulators revealed in detail how America’s tenth-biggest lender became mired in money laundering schemes and drug cartel activity.

Following TD Bank’s historic guilty plea in U.S. District Court on October 10, 2024, for conspiring to violate the Bank Secrecy Act (BSA) and committing money laundering, consumer advocate Lisa McCormick condemned the $1.8 billion in penalties as inadequate.

"With total assets exceeding $430 billion, TD Bank’s punishment pales in comparison to the scale of its misconduct, which allowed trillions of dollars of suspicious transactions to flow unchecked through its accounts,” said McCormick.

“Today’s penalties do not match the severity of TD Bank’s actions,” said McCormick. “The staggering systemic failures in their anti-money laundering programs are a clear indication that they chose profit over compliance, allowing criminal enterprises to thrive at the expense of public safety and financial integrity.”

Attorney General Merrick B. Garland characterized TD Bank’s actions as a deliberate choice to cater to criminals, yet the resulting penalties do not provide the accountability necessary to deter future wrongdoing. McCormick argues that this case exemplifies a broken system that permits corporations to evade true justice.

TD allowed three money-laundering networks to shuffle more than $670 million through bank accounts, and at least one of those schemes involved five of the lender’s employees.

The Justice Department also prosecuted two dozen individuals who were involved in money laundering and has charged two TD employees for their involvement in one of these schemes.

The number of bankers who knew about and had flagged the anti-money laundering failures was much greater, according to internal messages that reveal the problems were well-known among bank employees.

“You guys really need to shut this down LOL,” said one TD branch manager in an email to another manager in August 2020. The employee was referring to Da Ying Sze, known as David, who pleaded guilty in 2022 to laundering hundreds of millions of dollars in cash – much of which was moved through TD accounts.

In a separate case, five TD employees conspired with criminal organizations to create and maintain accounts that were used to launder $39 million, which included drug proceeds, to Colombia.

“This is not just a slap on the wrist for a corporate giant; it’s an invitation to continue unethical practices,” McCormick stated. “When corporate criminals can buy their way out of accountability while ordinary citizens face severe consequences for minor infractions, we are left with a system that fuels public outrage and distrust.”

McCormick's call for a corporate death penalty—a judicial dissolution of corporations guilty of egregious wrongdoing—stems from a deep frustration with the disparity in how justice is served to the wealthy and powerful compared to average citizens.

She noted that previous penalties, such as the $3.7 billion imposed on Wells Fargo for widespread malpractices, have failed to create lasting change in the culture of financial institutions.

“Why should a bank that has repeatedly failed in its legal and ethical responsibilities remain operational?” she asked. “If a bank teller caught stealing a few dollars faces immediate repercussions, why should executives behind massive fraud escape unscathed? It’s time to have one set of rules for everybody instead of different definitions of justice that apply to the rich, the middle-class, and the poor.”

McCormick has long been an advocate for legislative reform to enable the corporate death penalty, arguing that it would serve as a crucial deterrent against financial malfeasance and restore public trust in our institutions. She praised New York Attorney General Letitia James for her unsuccessful efforts to seek the dissolution of the National Rifle Association and victorious use of it against the Trump Organization, but McCormick expressed concern about the rarity of such actions.

In a stunning decision in September 2023, a Manhattan judge found that Donald Trump committed widespread, long-standing, and ongoing fraud at the Trump Organization and ordered what experts say amounts to the dissolution of his company.

“The corporate death penalty should not be an anomaly; it must be an available tool in our fight against corporate crime,” McCormick asserted. “It’s time for lawmakers to act decisively and put an end to the era of ‘too big to fail’.”

As investigations continue into TD Bank’s violations, asserted that meaningful justice is still needed—not only for the victims of money laundering but for all Americans demanding accountability from those in power.

McCormick is not alone in calling for tougher action to stop the corporate crime wave that is making a brutal economic system even more unfair for the working class that has always sustained the United States.

Comparing regulatory agencies to cops on the beat, Senator Elizabeth Warren has said officials who fight white-collar crime are simply not aggressive enough when it comes to penalizing financial misconduct.

Warren tried forcing federal regulators to fully disclose the terms of any settlement or deferred prosecution agreement reached in a major case, but after her bipartisan Truth in Settlements Act passed the United States Senate by unanimous consent that measure died in the House of Representatives.

Most of these eye-popping settlement fees are tax deductible, so a profitable company can slice a third of the price of the fine right off the top. Settlement agreements also frequently “credit” companies being penalized for continuing to do things that they are already doing.

McCormick said she supports full disclosure but it is unfair to let corporate criminals buy a 'get out of jail free' card using other people's money or in ways that do not truly deter wrongdoing in the first place.

McCormick said only a corporate death penalty would serve as a deterrent to the most sinister of crimes because when government regulators split profits with crooks it does nothing to halt greedy practices.