TD Bank provides update on US AML matters. Source: Shutterstock.com

TD Bank Group has announced that the Bank continues to actively pursue a global resolution of the civil and criminal investigations into its US Bank Secrecy Act (BSA)/anti-money laundering (AML) program by its US prudential regulators, the Financial Crimes Enforcement Network (FinCEN) and the US Department of Justice (DOJ).

In anticipation of a global resolution, which will include monetary and non-monetary penalties, the Bank has taken a further provision of $2.6bn in its third quarter financial results to reflect the Bank’s current estimate of the total fines related to these matters. The Bank expects that a global resolution will be finalised by calendar year end.

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TD also announced that it has sold 40,500,000 shares of common stock of The Charles Schwab Corporation

In May RBI reported that the bank had said that a comprehensive overhaul of its US and global AML programme is well underway. 

The share sale will reduce TD’s ownership interest in Schwab from 12.3% to 10.1%. In connection with this sale, TD has agreed not to sell any additional Schwab shares for a period of 45 days, subject to certain exceptions. TD has no current intention to divest additional shares.

After giving effect to this provision, TD’s Common Equity Tier 1 (CET1) ratio will be 12.8% as of July 31, 2024.  In TD’s fourth fiscal quarter, the provision will have a further negative impact of 35 bps on its CET1 ratio from the increase in operational risk. Also in the fourth fiscal quarter, the Schwab share sale will increase TD’s CET1 ratio by 54 bps.

Bharat Masrani, Group President and Chief Executive Officer, TD Bank Group, said: “We recognise the seriousness of our US AML program deficiencies and the work required to meet our obligations and responsibilities is of paramount importance to me, our senior leaders, and our Boards.

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“Our remediation program is well underway. TD has strengthened its US AML program with the addition of globally recognised leaders and talent from across the industry, including experts from regulatory agencies, law enforcement and government. The Bank is also making important investments in data and technology, training, and process design. We are building stronger foundations for our US business, where 30,000 colleagues proudly serve more than 10 million Americans from Maine to Florida.

“TD continues to work constructively with our regulators and law enforcement towards resolution of our US AML matters and looks forward to bringing additional clarity to our shareholders, clients and other stakeholders.”