TD Bank today became the largest bank in U.S. history to plead guilty to criminal charges related to money laundering. The combined resolution — spanning the Department of Justice, FinCEN, the OCC, and the Federal Reserve — totals approximately $3.1 billion. The OCC has simultaneously imposed an asset cap on TD’s U.S. banking operations, only the second time this measure has been used against a major institution, following Wells Fargo in 2018.
The guilty plea covers two charges: conspiracy to commit money laundering and failure to maintain an adequate anti-money laundering programme under the Bank Secrecy Act. The facts admitted by the bank are unusually specific and unusually damning.
Between 2014 and 2023, TD operated under what DOJ described as a “flat-cost paradigm” — a deliberate management decision to cap spending on AML compliance even as the bank’s U.S. assets grew from $190 billion to over $400 billion. The result was a transaction monitoring system that covered only a fraction of the bank’s domestic transactions, leaving enormous volumes of activity completely unscreened.
Three separate laundering networks exploited these gaps. The most significant involved Da Ying Sze, who operated a Chinese-linked money laundering operation that moved over $470 million through TD branches between 2018 and 2023. Sze’s network bribed TD branch employees with gift cards to process large cash deposits without proper reporting. In one case, a single branch processed $4 million in cash deposits in a single day — an amount that should have triggered immediate scrutiny.
A second network laundered approximately $39 million in drug trafficking proceeds through five TD branches in New Jersey. A third moved narcotics proceeds through branches in New York and Florida.
The bank failed to file thousands of suspicious activity reports. When it did file them, they were often late — sometimes by months or years. FinCEN’s order notes that TD’s automated transaction monitoring system was so poorly configured that it failed to detect obviously suspicious patterns, including structuring, rapid movement of funds, and transactions involving known high-risk geographies.
The penalties break down as follows: $1.8 billion to DOJ; $1.3 billion to FinCEN (the largest FinCEN penalty ever against a depository institution); $450 million to the OCC; and $124 million to the Federal Reserve. TD has also agreed to a four-year monitorship.
The OCC’s asset cap is arguably the most commercially significant element. It restricts TD’s ability to grow its U.S. balance sheet until regulators are satisfied that AML deficiencies have been remediated. When the same tool was applied to Wells Fargo in 2018, the cap remained in place for over six years and cost the bank billions in forgone revenue.
A compliance professional’s perspective
I have led AML remediation programmes at large banks. The failures described in the TD plea agreement are ones I recognise — not because they are unusual, but because they represent the logical endpoint of a very common institutional pathology.
The “flat-cost paradigm” is the story. Every compliance officer in banking has experienced the budget conversation where the business side argues that AML spending is “sufficient” while the compliance function argues it needs to scale with the bank’s growth. At most institutions, this tension produces an imperfect but defensible compromise. At TD, according to the plea, the business side won completely and the compliance function was effectively starved.
What makes TD’s case particularly egregious is the duration. This was not a temporary lapse. The flat-cost model persisted for nearly a decade, through multiple internal reviews, regulatory examinations, and industry-wide escalation of AML expectations. The bank’s own internal audit and compliance teams raised concerns that were either ignored or insufficiently resourced.
The employee bribery element is especially troubling. When a money laundering network can corrupt branch-level staff with gift cards — not sophisticated financial instruments, but gift cards — it tells you that the institution’s first line of defence has broken down entirely. Frontline staff are the most important control in any AML programme. If they are either unable to recognise suspicious activity or incentivised to ignore it, no amount of technology or policy will compensate.
For the industry, TD’s guilty plea should dispel any remaining illusion that major banks are immune from criminal prosecution for AML failures. The previous high-water marks — HSBC’s $1.9 billion deferred prosecution agreement in 2012, Danske Bank’s $2 billion plea in 2022 — were significant, but each could be explained away as involving unusual circumstances (HSBC’s Mexican operations, Danske’s Estonian branch). TD is a mainstream North American retail bank. Its U.S. branches are in shopping centres and high streets from Maine to Florida. If it can happen here, it can happen anywhere.
The asset cap is the enforcement tool that should concern every bank CEO and board member. Fines can be absorbed. An asset cap constrains your entire business strategy for years. It is the closest thing regulators have to an existential threat short of licence revocation.