TD Bank's $3 Billion Settlement Tied to Cryptocurrency Firms

TD Bank's Penalty and Cryptocurrency Links

TD Bank's recent financial and operational turmoil is connected to transactions involving two unnamed cryptocurrency firms based in Colombia and the United Kingdom. On October 10, TD Bank agreed to pay over $3 billion in penalties, as well as accept limitations on its growth in the US. This settlement addresses charges related to inadequate monitoring of money laundering activities by criminal networks.

FinCEN Report Highlights

A Financial Crimes Enforcement Network (FinCEN) report reveals that over $1 billion of TD Bank's transactions were related to these cryptocurrency firms. The transactions were conducted by "Customer Group C," connected with the sales finance and real estate sectors. This group managed transactions amounting to over $1 billion, predominantly sourced from a UK-based cryptocurrency exchange and wired to a Colombian financial institution offering virtual asset services.

High-Risk Transactions and Deviation

FinCEN noted that "Customer Group C" handled an average of over $100 million in monthly wire transfers. These transactions were often linked to third-party cryptocurrency trading in high-risk regions such as Colombia, China, and parts of the Middle East. TD Bank facilitated over $650 million in transfers from an international crypto exchange, a volume that starkly deviated from the group’s initial onboarding documentation.

TD Bank's Cryptocurrency Ventures

TD Bank previously engaged with the cryptocurrency market through TD Cowen, an independent investment bank, which launched Cowen Digital in March 2022. This initiative aimed to provide institutional clients with access to various crypto assets. However, the crypto unit was shut down in June 2023, amidst a climate of crypto company collapses and regulatory challenges in the banking sector.

The closure of TD Cowen's crypto division occurred shortly after TD Bank completed the acquisition of Cowen Bank for $1.3 billion in March 2023. This strategic step highlights the bank's cautious retreat from the volatile cryptocurrency market amidst increasing scrutiny and regulatory pressures.