FinCEN Accuses TD Bank of Failing to Report Suspicious $1 Billion in Crypto Transactions

The Financial Crimes Enforcement Network (FinCEN) claims that TD Bank failed to report suspicious activity from a specific customer group involved in international crypto transactions.

The watchdog reported that TD handled thousands of transactions for a company called Customer Group C." This firm supposedly operated for nine months in the sales finance and real estate sectors.

TD Bank will have to pay a fine of over $3 billion for violating the Bank Secrecy Act and non-compliance with anti-money laundering laws.

High-Risk Transactions and Lack of Transparency in Customer Group C

According to a recent FinCEN report, banking giant TD Bank failed to report suspicious international crypto transactions connected to an unnamed customer group identified as Customer Group C."

The financial regulator alleged that TD processed over 2,000 transactions for the company over nine months,supposedly operating in the real estate and sales finance industries.

According to the report, Customer Group C misled TD Bank about its international wire activity, saying its sales would not surpass $1 million annually. However, Customer Group C conducted over $1 billion in transactions through TD Bank.

Customer Group C received 90% of its funds from a UK-based cryptocurrency exchange. It also sent 60% of its funds to financial institutions in Colombia that offer services related to digital assets.

When Customer Group C started working with TD Bank, it did not mention Columbia as one of the regions it would deal with. Also, the firm began working with high-risk industries and firms" in China and the Middle East.

Dealing with high-risk jurisdictions and the rapid movement of a significant amount of funds over a short period raise red flags about Customer Group C's operations.

FinCEN's report noted that TD Bank ignored these red flags. The bank failed to report the suspicious activity until it received several queries from law enforcement about Customer Group C.

This lack of proactive reporting raises questions about TD Bank's internal controls and its commitment to compliance with the anti-money laundering (AML) laws.

It is troubling that TD Bank waited for law enforcement inquiries before addressing the suspicious transactions. This suggests a failure to recognize or respond to the potential risks associated with Customer Group C's operations.

Such a response is critical for maintaining the integrity of the banking system and preventing illegal activities such as money laundering or funding of illicit operations.

TD Bank to Pay $3.09 Billion as Penalty for Breaching the Bank Secrecy Act and Violating Money Laundering Regulations

FinCEN pointed out that TD Bank had some written rules for handling transactions involving digital assets. However, there is no proof that the bank applied extra controls for Consumer Group C's many transactions with virtual asset service providers.

Overall, this situation reflects a failure in risk management that could lead to severe consequences for the bank.

According to a press release by the United States Department of Justice, TD Bank admitted to violating the Bank Secrecy Act and pleaded guilty to money laundering. Thus, it will pay $1.8 billion in penalties.

In addition, FinCEN has added a penalty of $1.3 billion against TD Bank, including a four-year monitorship. This means an outside party will oversee the bank's compliance efforts over the next four years.

These penalties add up to $3.09 billion, the largest fine ever imposed under the Bank Secrecy Act.

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