By Nivedita Balu
TORONTO (Reuters) – In a bold move, Canadian financial institution TD Bank has appointed Guidepost Solutions as the compliance monitor for its anti-money laundering program following a hefty $3 billion penalty imposed by U.S. regulators last year.
Guidepost Solutions will oversee TD’s operations in the United States as part of a comprehensive initiative aimed at addressing the bank’s anti-money laundering issues and enhancing its controls, revealed Chief Financial Officer Kelvin Tran in an exclusive interview with Reuters.
The expenses associated with this monitoring arrangement will be covered by a dedicated $500 million fund that TD has allocated for compliance-related activities. The specifics of the monitoring arrangement are being disclosed by Reuters for the first time.
“Remediating anti-money laundering issues is our primary focus at TD, and we are making significant strides in this direction,” Tran emphasized.
Guidepost Solutions, a prominent U.S.-based firm with a workforce of over 250 individuals, including former federal prosecutors and intelligence officers, specializes in investigations, monitoring, and compliance.
TD made history by becoming the largest U.S. bank to plead guilty to breaching a federal law designed to combat money laundering. In October, the bank agreed to settle the charges by paying over $3 billion in penalties.
At that time, the U.S. Department of Justice and Financial Crimes Enforcement Network (FinCEN) mandated TD to engage a monitor – typically a third-party consultant or law firm – to oversee its operations, monitor its progress in risk management and controls, and report findings to regulators.
Regulators criticized TD for overlooking warning signs from high-risk clients and creating an environment conducive to exploitation by nefarious entities. They revealed that the bank facilitated transactions exceeding $650 million for the purpose of laundering funds on behalf of individuals involved in the sale of dangerous drugs such as fentanyl. Additionally, some TD employees were found to have accepted bribes from criminal organizations.
Subsequent to these events, TD confirmed the departure of CEO Bharat Masrani, who previously helmed its U.S. division. Furthermore, the bank’s global anti-money laundering officer Herb Mazariegos also stepped down, while several other executives were laid off, and salary cuts were implemented.
(Reporting by Nivedita Balu in Toronto, editing by Lananh Nguyen and David Evans)
