Sen. Elizabeth Warren, D-Mass., blasted the Justice Department for not punishing TD Bank Group more severely over the Canadian bank’s failed money laundering schemes in the United States.
Law enforcement and regulators hit the Toronto-based bank’s U.S. subsidiary earlier this month with a record $3.09 billion fine and asset cap handcuffs in a new money laundering case. But the penalties imposed by the DOJ do not go far enough, Warren said Wednesday in a letter seen by American Banker.
In the letter, sent to Attorney General Merrick Garland and Deputy Attorney General Lisa Monaco, Warren urged them to explain why the DOJ has not yet charged TD’s top executives for their culpability in the bank’s crimes .
The senator also blasted federal prosecutors for allowing TD to avoid certain criminal charges that would have given rise to the so-called death penalty provision — a never-before-used tool that gives regulators the power under certain circumstances strip a bank of its chartereffectively killing US activities.
“DOJ has thus far exonerated these bank executives for allowing the bank to be used as a criminal slush fund,” Warren said in a statement to American Banker. “One thing is clear: the Department of Justice must do a better job of holding large companies and their executives accountable for violations of the law.”
On October 10 TD became the first bank in the US to plead guilty to conspiracy to commit money laundering and agree to pay the largest fine in history for a case of its kind.
The DOJ, together with the Office of the Comptroller of the Monet, the Treasury Department’s Financial Crimes Enforcement Network, and the Federal Reserve, found that TD effectively left $18 trillion unattended over six years, and that bank employees and leaders were aware of the meager risk. management.
Warren said in her letter that the DOJ “has long failed to hold corporate executives accountable for crimes that occur under their watch.”
The DOJ declined to comment.
A week before the final resolution with TD was announced, Warren said she believed bank executives should be prosecuted, especially because TD was a repeat compliance offender.
Garland said at an Oct. 10 news conference that the DOJ’s “criminal investigations into individual employees at every level of TD Bank are active and ongoing.” He added that “no individual” is off limits. The DOJ has prosecuted about two dozen people involved in transferring more than $670 million in dirty funds through TD, including two non-executive bank employees.
Warren said in her letter Wednesday that the DOJ’s actions so far are not enough.
“Until and unless the executives who presided over TD Bank’s institutionalized money laundering are held accountable, the banks will continue to charge enforcement fines into the cost of doing business in lieu of compliance with our money laundering laws approach with the seriousness that it requires,” Warren said. said.
TD CEO Bharat Masrani has repeatedly said he takes responsibility for the AML fiasco, and he said in September he would get off in the spring after a term of office of 10 years. Over the years, U.S. banking regulators have sued TD a number of times for regulatory violations. The latest punishments are resulting in major setbacks for the bank’s activities in the United States.
TD did not immediately comment.
Warren’s letter echoes criticism she leveled more than a decade ago after a number of major banks were found to have inadequate anti-money laundering controls. HSBC was fined $1.9 billion, which at the time was the most expensive fine in American history, for passing drug money through a bank.
During a 2013 Senate committee hearing following the compliance issues, Warren asked regulators, speaking of big banks, “how many billions of dollars do you have to launder for drug lords” to have a charter revoked.
Retired banking supervisors, lawyers, academics and nonprofit leaders recently said the sheer scope of TD’s risk management blunders indicative of failures on the part of bank supervisors.
Although TD is the largest bank in U.S. history to plead guilty to the failure of the Bank Secrecy Act program and the first bank to plead guilty to money laundering conspiracy violations, Warren said the specific charges against the Canadian bank were intended to prevent the threat of a charter. termination. Congress gave federal bank regulators the authority to revoke charters in money laundering cases more than three decades ago, but they have never exercised that authority.
“The settlement also allows TD Bank to avoid the full scope of the penalties Congress intended for banking regulators in response to criminal money laundering,” Warren said.
Some observers say the DOJ has avoided using the death penalty so as not to sow uncertainty in the financial system. One price of that decision is that regulators and law enforcement are exposed to vitriol from politicians and progressive groups.
In the past, the Justice Department and the OCC have denied that they acted in cahoots with each other to shield the banks from hearings on whether to revoke their charters. Warren asked the DOJ in her Wednesday letter whether and how the agency consulted with banking regulators during negotiations with TD.
“To better understand DOJ’s approach to negotiating,” Warren also asked why the bank was not charged with money laundering. executives were not hit with criminal charges and what compensation clawbacks will be necessary, among other questions.
In connection with TD’s debt plea, the OCC placed a limit on the growth of two TD subsidiaries. the second time ever US regulators have imposed an asset limit on a US bank for regulatory violations.
Although TD’s U.S. holding company has pleaded guilty to causing the bank to bungle its anti-money laundering controls, such parent companies are not subject to the death penalty as banks are.
Meanwhile, the banking subsidiary’s crimes include conspiracy to fail to maintain an adequate AML program, conspiracy to fail to report activities; and conspiracy to commit money laundering. The key phrase “conspiracy to commit” exempts TD from the death penalty provision, which Warren called “downright ridiculous.”
“In plain terms, if DOJ had charged TD Bank for the crime it committed – money laundering – the OCC would have been legally obligated to serve TD Bank with a notice of intent to terminate the bank’s charter and a hearing to discuss the matter publicly. benefits of a charter repeal,” Warren said
She added that TD Bank is the entity that has failed to implement adequate AML.
“These charging decisions represent absurd legal gymnastics by the DOJ that ultimately allowed the bank and its top executives to avoid full responsibility for their actions,” Warren said. “This is not an acceptable outcome.”