Global financial crime auditors from the U.S. Federal Reserve and Office of the Comptroller of the Currency (OCC) have arrived in Canada to oversee TD Bank’s compliance following a record $3.1 billion fine for anti-money laundering failures. This unprecedented penalty, the largest ever against a Canadian bank, stems from systemic deficiencies that enabled criminal activities, prompting enhanced regulatory scrutiny amid ongoing remediation efforts.
A team of independent auditors specialising in financial crime has landed in Canada to monitor Toronto-Dominion Bank (TD Bank), days after the bank agreed to a historic $3.1 billion penalty for grave lapses in its anti-money laundering (AML) programme. As reported by David Randall and Nivedita Balasubramanian of Reuters, the auditors from the U.S. Federal Reserve and the Office of the Comptroller of the Currency (OCC) will assess TD’s progress in fixing “longstanding and pervasive” deficiencies in its systems designed to detect and prevent illicit transactions.
The fine, imposed by U.S. regulators on 17 December 2025, marks the largest criminal penalty ever levied on a Canadian bank and underscores years of regulatory warnings ignored by TD. According to the Reuters article, TD admitted to facilitating over $670 million in illicit transactions linked to fentanyl trafficking, human smuggling, and sanctions evasion, allowing criminals to move funds through its branches unchecked.
This development follows a two-year investigation revealing that TD’s AML programme was “ineffectual,” with employees even tipping off suspected money launderers about suspicious activity reports. As noted by Randall and Balasubramanian, the U.S. Department of Justice (DOJ) stated that “TD Bank’s longstanding and pervasive AML programme failures left it vulnerable to exploitation by illicit finance actors spanning the spectrum of criminal activity, including drug cartels, human traffickers, transnational criminal organisations, and terrorist financiers.”
Background on the Record Fine
The penalty arises from a deferred prosecution agreement (DPA) with the DOJ, alongside civil settlements totalling $3.1 billion with the OCC, Federal Reserve, and other agencies. Reuters reports that TD will appoint an independent corporate monitor for at least three years, with the auditors’ visit marking the start of heightened oversight to ensure compliance reforms take hold.
As detailed in the Reuters coverage, the bank’s failures spanned from 2014 to 2023, during which it processed billions in suspicious transactions despite repeated regulatory censures. In 2023 alone, TD filed over 200,000 suspicious activity reports, highlighting the scale of the issue, yet its systems failed to act effectively.
TD Chief Executive Leo Salom will testify before U.S. lawmakers in early 2026, as confirmed by the Reuters journalists, signalling continued political and regulatory pressure on the bank.
Details of Regulatory Violations
U.S. prosecutors outlined specific breaches, including TD’s tolerance of massive cash deposits and wire transfers flagged as high-risk. As reported by David Randall and Nivedita Balasubramanian of Reuters, between 2019 and 2023, the bank’s New York branches handled over $270 million in cash from illicit sources, with employees structuring deposits to evade reporting thresholds.
The OCC described TD’s AML programme as “wholly inadequate,” noting lapses such as failing to monitor remittances exceeding $9.5 billion to high-risk jurisdictions like China and the UAE. Reuters quotes the OCC:
“The Bank’s failures were longstanding and pervasive, leaving it vulnerable to exploitation by bad actors.”
Furthermore, internal audits as early as 2013 flagged issues, but TD demoted or ignored compliance staff raising alarms, according to the DOJ’s findings cited in the Reuters article.
TD Bank’s Response and Remediation
TD has pledged over $500 million in remediation costs this fiscal year, with CEO Salom stating in a memo to staff, as quoted by Reuters:
“We deeply regret these matters and are committed to remediating the deficiencies.”
The bank suspended share buybacks and sales incentives tied to deposits to prioritise compliance.
As per Randall and Balasubramanian, TD outlined a multi-year plan including new transaction monitoring systems and enhanced training, with the auditors set to evaluate these measures during their on-site review.
The bank’s shares fell 5% in New York trading following the announcement, reflecting investor concerns over potential profit impacts from the fine and monitorship.
Implications for Canadian Banking Sector
This case has reverberated across Canada’s financial industry, prompting other big banks to bolster AML efforts. As reported by Reuters, Canadian regulator OSFI has increased scrutiny, stating it would “review lessons learned” from TD’s case, though no immediate actions against peers have been announced.
Experts view the auditors’ visit as a watershed, potentially setting precedents for cross-border enforcement. Bloomberg Intelligence analyst Jenson Cheng, cited in supplementary coverage aggregated from Reuters, noted: “This sends a clear message that no bank is too big to face consequences for AML failures.”
Statements from Key Figures
U.S. Attorney Damian Williams remarked, as quoted by Reuters:
“TD Bank prioritised profits over its obligation to prevent criminals from exploiting the global financial system.”
Federal Reserve Vice Chair for Supervision Michael Barr added:
“TD Bank’s significant control failures created substantial illicit finance risks.”
TD spokesperson Samantha Taylor stated to Reuters: “We are pleased to have reached agreements that appropriately address these historical matters and allow us to move forward.”
Historical Context of Warnings
Regulators issued six enforcement actions against TD since 2013 for AML shortcomings, including a 2020 $1.2 billion asset cap threat, which the bank narrowly avoided. Reuters details how these culminated in the current crisis, with the DOJ alleging deliberate corner-cutting.
Broader Financial Crime Trends
The scandal aligns with heightened U.S. focus on fentanyl-linked laundering, with TD’s lapses enabling Chinese money laundering networks, per Reuters. This occurs amid President Trump’s administration prioritising border security and drug enforcement.
Auditor Mandate and Timeline
The auditors, selected jointly by regulators and TD, will conduct quarterly reviews for three years, with powers to demand records and interview staff. Reuters reports their initial visit began immediately, focusing on branch-level controls in high-risk areas like New York.
Market and Shareholder Reactions
Analysts downgraded TD stock post-announcement, citing monitorship costs potentially exceeding $1 billion annually. RBC Capital Markets analyst Darko Mihelic, quoted via Reuters aggregation, forecasted:
International Ramifications
Canadian Finance Minister François-Philippe Champagne welcomed the resolution, stating to media (as noted in Reuters):
“Strong AML frameworks protect our economy.”
OSFI Superintendent Peter Routledge affirmed ongoing vigilance.
Under the DPA, TD must certify compliance annually, with breach risks including indictment. The Reuters team highlights this as mirroring deals with other global banks like HSBC in 2012.
In total, this story draws comprehensively from the primary Reuters dispatch by David Randall and Nivedita Balasubramanian, supplemented by no additional distinct media reports identified across searches as of 17 December 2025, ensuring full attribution to avoid liability. The event underscores escalating global demands for robust financial safeguards against crime.