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Transaction monitoring is crucial because it enables financial institutions to detect and report suspicious activities in real-time and high risk clients need to be treated with extra caution. Insightful analysis!

???TD Bank Fined $1.8B for Bank Secrecy Act Violations and Money Laundering Scheme??? #TDBank, one of North America's largest financial institutions, has found itself at the center of a significant legal battle after pleading guilty to multiple felonies related to money laundering and compliance failures. The bank's #internalcontrols, #governance structures, and #compliance systems failed for nearly a decade, allowing criminal activities such as money laundering to go undetected. These failures culminated in an unprecedented $1.8 billion criminal penalty under the Bank Secrecy Act (#BSA), part of a broader settlement totaling over $3 billion in fines and civil penalties. This case represents the largest penalty ever levied under the BSA and highlights the severe governance and oversight shortcomings within TD Bank's operations. Governance Problems in the Financial Sector The TD Bank case is emblematic of deeper governance failures plaguing the financial sector, where compliance programs are often underfunded and understaffed, resulting in insufficient oversight of #risk management. In TD Bank’s case, these weaknesses allowed for trillions of dollars in transactions to be processed without adequate monitoring for illicit activities. Despite repeated warnings from regulators, TD Bank failed to prioritize compliance, focusing instead on aggressive growth, leading to systemic risks. This serves as a cautionary tale for the broader financial industry, emphasizing the critical need for stronger governance frameworks, better #riskmanagement practices, and greater accountability at every level of operation to safeguard against financial crime. Where Was Internal Audit in Financial Sector Failures? Internal #audit is meant to serve as a critical layer of oversight within financial institutions, identifying weaknesses in governance, risk management, and compliance. However, failures in internal audit across the financial sector often stem from inadequate resources, poor independence, and limited scope. Additionally, internal audit may lack the necessary independence from management, leading to conflicts of interest or a reluctance to highlight serious deficiencies. When internal audit fail to identify and escalate risks, it allows systemic governance issues to persist, ultimately leading to compliance breaches and significant financial and reputational consequences for institutions. #MoneyLaundering #FinancialCrime #ITGRC #ITGRCAdvisory #BWAdvisory #AkademiaITGRC #AML #BankingRegulations #FinancialCrimeEnforcement #CorporateGovernance #InternalAudit #FinancialSectorRisks ???Link to the DOJ informations will be in the comments below. https://lnkd.in/gyTMP6Cr Anthony Pugliese Richard Chambers The Institute of Internal Auditors Inc.

???? The Financial Transactions and Reports Analysis Centre of Canada (#FINTRAC) has levied a significant administrative monetary penalty against TD Bank, marking the largest fine in the agency's history. The penalty, amounting to nearly C$9.2 million (approximately $6.71 million USD), was imposed following a 2023 compliance examination that revealed TD Bank's failure to adhere to several #antimoneylaundering (#AML) regulations. According to FINTRAC, the bank did not adequately report suspicious transactions, assess, or document #risks associated with #moneylaundering and #terroristfinancing. TD Bank, which has faced scrutiny over its AML compliance both in #Canada and the United States, stated that improvements to address these issues are already underway. The fine was issued shortly after TD Bank allocated $450 million for potential resolutions with a U.S. regulator concerning similar #compliance challenges. This step underscores the ongoing efforts by Canadian authorities to tighten financial oversight, following additional powers granted to FINTRAC related to national security. https://lnkd.in/ebUz-VC7

CASE STUDY SERIES: “TD Bank Hit with $37.5 Million Penalty for Compliance Failures” BREIF INTRO: TD Bank, with over 1,300 domestic locations and a foreign branch, had $212 billion in assets and about 25,000 employees. As a subsidiary of The Toronto-Dominion Bank, it was regulated by the OCC. The OCC found that TD Bank violated the Bank Secrecy Act from April 2008 to September 2009, resulting in a $37.5 million civil penalty. WHAT WENT WRONG? 1.??????UNFILED SAR’s: The Financial Crimes Enforcement Network found that TD Bank failed to timely report suspicious activities from April 2008 to September 2009, violating the Bank Secrecy Act. During this time, Scott Rothstein ran a Ponzi scheme using TD Bank accounts. Rothstein, who pleaded guilty to racketeering and was sentenced to 50 years in prison in 2010, deceived investors with fake settlement agreements and used TD Bank accounts to give a false sense of legitimacy. He manipulated bank statements and lock letters to mislead investors. The Bank Secrecy Act required banks to report suspicious transactions of $5,000 or more. TD Bank failed to report such activities or detect suspicious transactions in Scott Rothstein’s accounts, which handled around $4 billion, including Ponzi scheme funds. In 2011, TD Bank reviewed these transactions and filed five late SARs for $900 million in suspicious activity. Inadequate policies, procedures, and training led to the failure to recognize and report the suspicious activity despite multiple alerts over 17 months. CIVIL MONEY PENALTY: The Financial Crimes Enforcement Network had determined that a civil money penalty in the amount of $37.5 million is warranted for TD Bank’s violations of the Bank Secrecy Act. LESSONS LEARNED: Key learnings for other financial institutions: 1. Compliance Was Non-Negotiable 2. Timely Reporting Was Essential 3. Customer Due Diligence Could Not Be Overlooked 4. Effective Use of Technology 5. Regular Audits and Reviews Were Necessary FPM AML-CHECK? offered an advanced screening solution to help financial institutions in Pakistan combat financial crimes, with a comprehensive database of domestic Politically Exposed Persons (PEPs). Recognized for excellence and endorsed by the NBFI and Modaraba Association of Pakistan, our award-winning AML solution ensured robust compliance. For more information, contact us at: WhatsApp: 0301-1157150 / 51?? Email: [email protected] #AntiMoneyLaundering #AMLCompliance #AMLCheck #ComplianceMatters #AMLTechnology #RiskManagement #ComplianceSolutions #KYC #TransactionMonitoring #FinancialRegulations #FraudPrevention #AMLSoftware

Canadian Giant TD Bank – A Catalogue #AML Failings ?? Canada’s second biggest bank, Toronto Dominion Bank (TD Bank), has been hit by their AML regulator (FINTRAC) with a C$9.2m fine for 5 administrative (not criminal) failings: 1. Failure to File Suspicious Transaction Reports (#STRs)?? Transaction monitoring is AML 101, but out of 178 case files reviewed during FINTRAC’s 2023 examination, they found 20 where an STR was not filed despite reasonable grounds to file. 2. Failure to Classify Clients as High-Risk?? TD Bank switched to a new AML risk rating system, but 96 clients were not identified as high-risk during the transition which resulted in them not being subjected to special AML monitoring. 3. Failure to Apply Enhanced AML Measures?? Since TD Bank hadn’t rated 96 clients as high risk, it isn’t surprising that 85 of them had not been subjected to special AML monitoring. 4. Failure to Conduct Client Periodic Monitoring?? The failure to classify 96 clients as “High-Risk” (see point #2 above) meant that these clients ongoing EDD was not carried out and their AML risks were not reassessed. 5. Failure to Keep AML Client Records?? And finally, TD Bank hadn’t kept a record of the AML measures they had undertaken regarding the 96 high-risk clients which they had failed to identify. Failing to investigate and/or file STRs must be down to a combination of poor human resources, poor IT systems, poor training and poor management oversight – which indicates a lack of senior management focus on the bank’s overall AML! At Dynamic-GRC we have developed an AML 360° Assessment with Jersey headquartered Baker Regulatory which helps firms identify and quantify their AML strengths and weaknesses. The AML 360° Assessment provides hard data to focus on AML risk areas and provides a dynamic picture of evolving risks. If you would like to discuss how your firm can assess its AML/CFT/CPF effectiveness, then do contact me or Barry Faudemer at Baker Regulatory: https://lnkd.in/e7r5ZrYk #compliance #moneylaudnering #complianceofficer https://tgam.ca/3QPDoCH

TD Bank Record Fine for AML Failures: Key Takeaways TD Bank has been fined a record-breaking sum of $1.3 billion - the largest penalty against a depository institution in U.S. Treasury and FinCEN history. My key takeaways from this case: Profit Over Controls TD Bank’s decision to prioritise profits and growth over necessary upgrades to its AML system had serious consequences. The Bank admitted it was aware that its program was under-resourced, poorly designed, and ultimately deemed to fail to address significant illicit finance risks. Technology Mismanagement Even with access to sophisticated monitoring tools, technology is only effective if properly managed. TD Bank’s case underscores that having advanced systems isn’t enough - institutions must also commit to using them correctly. Shockingly, $18.3 trillion worth of transactions went unmonitored for over a decade. Inadequate Risk Assessment Despite being aware of extensive funnel account activity involving high-risk countries, TD Bank delayed taking action. Lack of urgency in addressing obvious risks demonstrates a critical failure in proactive risk management. Tone at the Top The culture at TD Bank appears to have fostered complacency toward suspicious activities. One shocking instance involved a criminal network distributing $57,000 in gift cards to bank employees to facilitate suspicious deposits. The case serves as a strong reminder of the critical need for a well-funded and fully functional AML program. https://lnkd.in/dvy49Mek.

CASE STUDY SERIES: “TD Bank Hit with $37.5 Million Penalty for Compliance Failures” BREIF INTRO: TD Bank, with over 1,300 domestic locations and a foreign branch, had $212 billion in assets and about 25,000 employees. As a subsidiary of The Toronto-Dominion Bank, it was regulated by the OCC. The OCC found that TD Bank violated the Bank Secrecy Act from April 2008 to September 2009, resulting in a $37.5 million civil penalty. WHAT WENT WRONG? 1.??????UNFILED SAR’s: The Financial Crimes Enforcement Network found that TD Bank failed to timely report suspicious activities from April 2008 to September 2009, violating the Bank Secrecy Act. During this time, Scott Rothstein ran a Ponzi scheme using TD Bank accounts. Rothstein, who pleaded guilty to racketeering and was sentenced to 50 years in prison in 2010, deceived investors with fake settlement agreements and used TD Bank accounts to give a false sense of legitimacy. He manipulated bank statements and lock letters to mislead investors. The Bank Secrecy Act required banks to report suspicious transactions of $5,000 or more. TD Bank failed to report such activities or detect suspicious transactions in Scott Rothstein’s accounts, which handled around $4 billion, including Ponzi scheme funds. In 2011, TD Bank reviewed these transactions and filed five late SARs for $900 million in suspicious activity. Inadequate policies, procedures, and training led to the failure to recognize and report the suspicious activity despite multiple alerts over 17 months. CIVIL MONEY PENALTY: The Financial Crimes Enforcement Network had determined that a civil money penalty in the amount of $37.5 million is warranted for TD Bank’s violations of the Bank Secrecy Act. LESSONS LEARNED: Key learnings for other financial institutions: 1. Compliance Was Non-Negotiable 2. Timely Reporting Was Essential 3. Customer Due Diligence Could Not Be Overlooked 4. Effective Use of Technology 5. Regular Audits and Reviews Were Necessary FPM AML-CHECK? offered an advanced screening solution to help financial institutions in Pakistan combat financial crimes, with a comprehensive database of domestic Politically Exposed Persons (PEPs). Recognized for excellence and endorsed by the NBFI and Modaraba Association of Pakistan, our award-winning AML solution ensured robust compliance. For more information, contact us at: WhatsApp: 0301-1157150 / 51?? Email: [email protected] #AntiMoneyLaundering #AMLCompliance #AMLCheck #ComplianceMatters #AMLTechnology #RiskManagement #ComplianceSolutions #KYC #TransactionMonitoring #FinancialRegulations #FraudPrevention #AMLSoftware

#TDBank #AML #BSA #OCC #Fed #FinCEN #DOJ #supervision Where were regulators as TD spent a decade ignoring its Bank Secrecy Act obligations to a criminal extent? Why did the DOJ press release announcing TD’s guilty plea note that the bank’s AML program “appeared adequate on paper”? After reporting all of the incredible AML lapses and even money laundering conspiracy involving TD Bank, there are many outstanding questions: How did the bank manage to get away with these actions between 2014 and 2023? Where were the scathing OCC exams and repeated MRAs that should have been imposed and led to enforcement actions (if uncorrected)? There is, in my estimation, a single potential explanation/justification for regulatory inaction that ironically is offered-up in the U.S. Department of Justice press release announcing TD’s guilty plea. Ironic, of course, as this was clearly a situation where the bank’s misdeeds were uncovered by DOJ (as is always the case in these mammoth actions) and not by regulators responsible for bank supervision. “Although TD Bank maintained elements of an AML program that appeared adequate on paper, fundamental, widespread flaws in its AML program made TD Bank an ‘easy target’ for perpetrators of financial crime,” the DOJ release (attached below) stated. Does this mean that regulators were justifiably duped by a paper program and did no testing or digging? I don’t know (for a fact) what DOJ was getting at with this statement, but I guarantee it was included with purpose. Maybe experts would care to weigh-in on that purpose via comments below. Jim Richards Lester Joseph

FinCEN has fined TD Bank a record?$1.3 billion for violations of the Bank Secrecy Act (BSA). FinCEN’s $1.3 billion settlement is the largest penalty against a depository institution in US Treasury and FinCEN history. FinCEN’s action also imposes a four-year independent monitorship to oversee TD Bank’s required remediation. TD Bank also agreed to pay $1.8 billion to the US Justice Department and plead guilty to resolve the US government’s investigation that the bank violated of the Bank Secrecy Act and allowed money laundering. Among other things, TD Bank willfully failed to establish an adequate AML program, didn't invest sufficient time, money, or managerial resources to create and maintain its AML program, and didn't take sufficient steps to ensure TD Bank’s ongoing compliance with the BSA. Inadequate staffing levels were a huge problem at the bank and caused significant backlogs. Day-to-day compliance with the BSA was a challenge, because multiple AML managers without any prior experience in AML were appointed. The appointment of AML managers without sufficient AML knowledge directly conflicts with BSA/AML regulatory guidance on assuring and monitoring the Bank’s compliance with the BSA, which requires suitable resources, including staff, who maintain the proper skills and expertise necessary to support the timely identification, monitoring, reporting, and management of a bank’s illicit financial activity risks, according to the FinCEN press release. And then, there's this bit: TD Bank’s approach to transaction monitoring was willfully deficient and created significant gaps in reporting suspicious activity. Funnel accounts, high-risk jurisdictions, insufficient monitoring, CDD failures, high-risk products, failure to tailor training to appropriate personnel and relevant risks, governance failures... Basically, it looks like TD was a failure on some level at all the pillars of an AML program! CFT fails? Yes! For example, in July 2019, TD onboarded accounts for a New York-based religious institution despite its leader’s ties to terrorist organizations and involvement as an unindicted coconspirator in the 1993 World Trade Center bombings.?The information was publicly available, and terrorism-related suspicious activity began pretty much as soon as the customer was onboarded, with the first SAR being filed this year! The Institute for Financial Integrity can help your financial institution learn to do AML/CFT the right way, so you can avoid massive fines! Please don't let this happen to you. Give us a holler now! https://lnkd.in/eq5dqVcf