A FinCEN review of TD Bank’s activities and compliance with anti-money laundering rules discovered that the traditional finance bank neglected to declare “suspicious activity” involving cryptocurrency.
A consent order claims that the bank processed transactions for “Customer Group C,” an unnamed entity, “including the facilitation of over $420 million to a financial institution offering cryptocurrency services in the high-risk jurisdiction of Colombia.“
TD Bank Blamed for Anti-Money Laundering Violations
FinCEN noted a pattern in which Customer Group C was transacting more than $100 million in wire transfers each month, “most of which involved high-risk industries and jurisdictions, including Colombia, China, and countries in the Middle East and facilitated apparent third-party cryptocurrency trading.“
According to the order, Customer Group C experienced transactions above $1 billion between July 2023 and April 2024. Around 90% of it came from a cryptocurrency exchange that was based in the UK but remained anonymous. A financial institution in Colombia received 60% of the outgoing transactions; this institution remained anonymous.
According to the ruling, the gang was also associated with an “international cryptocurrency exchange platform” and obtained more than $650 million from it. Which platform FinCEN is referring to is unclear, though.
The order stated, “TD Bank processed these transactions on behalf of Customer Group C, due in part to a lack of clear controls applicable to customers dealing in cryptocurrency: the limited high-level written policies the Bank had in place relating to virtual assets alluded to the requirements for certain additional controls and monitoring.”
“Yet, there is no proof that Customer Group C’s numerous transactions with virtual asset service providers ever underwent improved controls.“
TD Bank Fined for Failing to Report Suspicious Activities
Up until it got “multiple law enforcement inquiries” regarding the unidentified entity, the bank neglected to disclose the behaviour.
TD Bank admitted to AML infractions last week and agreed to pay a hefty $3 billion fine. According to the order submitted to the government office, $1.3 billion of that total went to FinCEN.
This incident highlights the ongoing challenges financial institutions face in effectively monitoring and controlling transactions involving cryptocurrency. With the rapid growth of digital assets, regulatory scrutiny is expected to increase, urging banks and other financial entities to adopt stricter measures to combat potential money laundering and ensure compliance with AML laws.