TD takes AML hit of $450m with further penalties to follow image credit: shutterstock

TD Bank has taken an initial provision of $450m in connection with discussions with one of its US regulators. The issue relates to previously disclosed regulatory and law enforcement investigations of TD’s US Bank Secrecy Act/anti-money laundering programme.

Moreover, TD has cautioned that it anticipates additional monetary penalties. TD said that the initial provision of $450m “does not reflect the final aggregate amount of potential monetary penalties or any non-monetary penalties, which are unknown and not reliably estimable at this time.”

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The bank’s regulatory and law enforcement discussions with three US regulators and the Department of Justice are ongoing. The initial provision of $450m relates to discussions with just one of the three regulators involved.

TD’s AML programme was insufficient to effectively monitor, detect, report, and respond to suspicious activity. Work has been underway to remedy these deficiencies.

In a statement, TD said: “TD is a strong institution with the capital, liquidity, and capacity to fund the critical effort currently underway to strengthen its AML programme, invest in the business, and continue to serve its customers and clients with excellence.”

TD is due to release its second quarter results on 23 May. Analysts have forecast that TD may face fines in the region of $500m-$1bn for the breach.

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The regulatory issue tops off a challenging year for TD. Its share price is down by 4.7% for the year to date. This time last year, it walked away from the proposed deal to acquire US-based First Horizon Bank. TD aimed to leverage First Horizon’s regional presence to support its growth strategy in the US. That strategy is now on hold pending resolving its regulatory issues and a likely change of CEO.