TD penalties expected to be higher on alleged drug money laundering link: analyst

A banking analyst says TD Bank Group could be hit with more severe penalties than previously expected after a report that the investigation it faces in the U.S. is tied to laundering illicit fentanyl profits.

National Bank analyst Gabriel Dechaine says the worst-case scenario of the multiple U.S. investigations TD faces needs reassessing after the Wall Street Journal reported the link Thursday.

The newspaper said the U.S. Justice Department investigation is focused on how Chinese drug traffickers allegedly used TD to launder at least US$653 million, and bribed TD employees to do so.

TD said in a statement that criminals constantly seek to use banks to launder money, and its U.S. anti-money laundering program did not effectively thwart these activities.

The bank says the failing was unacceptable, and a comprehensive effort is underway to strengthen its anti-money laundering program, including investments in talent, tools and technology.

Dechaine says the severity of the allegations means TD could not only face fines well above the $500 million to $1 billion that many investors have anticipated, but also more severe regulator-imposed limitations on its business activities.

This report by The Canadian Press was first published May 3, 2024.