TD Bank Sells Schwab Shares To Cover Money Laundering Expenses
Actions have consequences, and unfortunately for TD Bank, there’s no cheap way out of its latest mistake. The Canadian bank has allocated $2.6B for potential fines arising from a US investigation into its anti-money laundering (AML) practices. This probe highlights claims that Chinese drug traffickers laundered at least $650M through a TD branch between 2016 and 2021, with accusations of an employee accepting bribes to facilitate these activities.
- TD Bank’s recent allocation comes after a $450M provision made in April for the same compliance issue, bringing its total anticipated losses to $3B.
- To foot the bill, the bank has raised $3.4B by selling off its Charles Schwab shares, lowering its stake in the company from 12.3% to 10.1%.
Cleaning up the mess: TD Bank claims it has upgraded its US AML measures by recruiting “globally recognized leaders and talent from across the industry, including experts from regulatory agencies, law enforcement, and government.” Additionally, the bank has spent $500M to enhance its AML capabilities and risk controls. Despite this, the road ahead remains challenging. While TD hopes to resolve the regulatory probe by year-end, analysts are concerned that the non-monetary penalties could hamper the firm’s US business operations, which are already struggling due to a decline in deposit volumes and margins.
