(Bloomberg) — Toronto-Dominion Bank will pay about $3 billion in penalties and face restrictions on its US growth in a settlement with regulators over its failure to catch money laundering, the Wall Street Journal reported.
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The Office of the Comptroller of the Currency is expected to impose an asset cap on the bank, the Journal said, citing people familiar with the matter it didn’t identify.
The size of the financial penalty doesn’t come as a surprise because Toronto-Dominion has already set aside $3 billion in provisions for the settlement. But an asset cap seems certain to prevent the bank from carrying on the growth-by-acquisition strategy it has followed in US retail banking for much of the past two decades. Wells Fargo & Co. has been under similar regulatory limits on the size of its balance sheet for several years.
Canada’s second-largest bank has faced an array of legal challenges south of the border, including probes by the OCC, the Department of Justice and the Federal Reserve into alleged failures to catch money laundering and other financial crimes at several branches in New York, New Jersey and Florida.
The investigations have had a wide-ranging impact on the bank, including marring the end of Chief Executive Officer Bharat Masrani’s decade-long tenure. He took responsibility for the anti-money-laundering challenges when Toronto-Dominion announced his retirement last month. Raymond Chun, who currently leads its Canadian division, will take the top job on April 10.
Toronto-Dominion was also forced to scrap its $13.4 billion deal to acquire US regional bank First Horizon Corp. last year after saying it couldn’t get timely regulatory approvals.
A spokesperson for the bank wasn’t immediately available for comment Wednesday.
The Canadian bank has more than 10 million US customers and almost 1,200 branches concentrated along the East Coast, and its American retail operations account for about a quarter of its revenue. But there have been persistent questions about whether it will be able to continue to expand that business.
Toronto-Dominion recently reached a deal with US prosecutors and regulators to pay more than $20 million to resolve a Treasuries spoofing case and, separately, agreed to pay almost $28 million in fines and restitution for sharing inaccurate US customer data with consumer reporting companies.
–With assistance from Russell Ward.
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