Prime Minister Justin Trudeau said the federal government is “concerned” about the actions of TD Bank’s U.S. subsidiaries that led to a landmark $3 billion plea deal to settle money laundering charges this month.
Trudeau made the comments during question period in the House of Commons on Wednesday when NDP MP Don Davies asked him what the Liberals had done to “address TD Bank’s repeated criminal actions.”
“We are of course very concerned about the actions of TD Bank in the United States,” the Prime Minister responded.
“We make sure every day that banks in Canada are acting by following all the rules. We have continued to strengthen financial oversight and are making sure there is full accountability for those responsible for these violations in the United States.”
The comment appeared to be the first public admission by Trudeau or any minister in the case, which saw TD plead guilty to violating a US law aimed at preventing money laundering – the largest bank ever to do so.
At the time the settlement was announced, Superintendent of Canadian Financial Institutions Peter Rutledge said in a statement that the information disclosed in the case was “serious” but that he was unable to comment on the affairs of any federally regulated Canadian financial institution.
A spokesperson for Finance Minister Chrystia Freeland’s office told Global News that the deputy prime minister “takes the stability of Canada’s financial system very seriously” and is “closely monitoring the situation” along with regulatory authorities.
The US government accused TD of ignoring several red flags issued by high-risk customers and creating a “proper” environment for bad actors to exploit. TD failed to monitor more than $18 trillion in customer activity for nearly a decade, enabling three money laundering networks to funnel illicit funds through accounts at the bank, U.S. authorities said.
In addition to the more than $3 billion fine, the plea deal included placing a rare asset cap on TD’s U.S. business interests, usually reserved for extreme cases. The penalty dealt a major blow to TD, which is the 10th-largest bank in the United States and was planning to expand further.
Some US politicians said the sanctions were not enough, including US Senator Elizabeth Warren, who said they “allow bad bank executives off the hook for allowing TD Bank to be used as a criminal fund.”
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The plea deal also drew scrutiny over Canada’s relatively modest penalties for similar activity.
In Canada, Fintrac can impose a maximum fine of $500,000 for each very serious reporting violation, or it can refer violations for possible criminal prosecution.
In contrast, the huge US fine came in part because of US rules that allow regulators to fine banks up to US$500,000 for every day they lack an effective anti-money laundering program.
The limited fines available to Fintrac mean that the $9.2 million penalty it imposed on TD earlier this year was the largest it has ever issued.
Fintrac said in a statement that besides the standard penalty it imposed on TD, it is also requiring the bank to develop an action plan to address its deficiencies, and the regulator may impose additional penalties if the bank does not follow through on its plan.
TD said it is making the investments, changes and improvements required to meet obligations related to its anti-money laundering program. New CEO Ray Chun told investors on a conference call on the day the US plea deal was announced that TD will “make the changes necessary to put the bank on a stronger footing” and “fulfill our obligations to our regulators.”
The federal government conducted public consultations last year on ways to improve and strengthen Canada’s anti-money laundering regime, and strengthened regulatory requirements for casinos and other non-bank entities earlier this year.
The government has zero tolerance for financial crime and is constantly working to improve Canada’s ability to combat financial crime, the Ministry of Finance told The Canadian Press in a statement.
A government spokesperson said the government has introduced a slew of measures to strengthen money laundering oversight in Canada, including increasing information sharing, and since 2019 has invested nearly $379 million to combat financial crime.
Speaking at a risk conference earlier in October, Rutledge acknowledged that money laundering was “a more significant risk than I appreciated three years ago when I started working” and that increasing incidents had forced his office to study the issue more closely.
– With files from The Canadian Press
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