This US Bank Is Suspected Of Being Involved In A Money Laundering Case, Prepares IDR 41.6 Trillion Funds For Fines

JAKARTA - The TD Bank, one of the leading financial institutions in the United States, is reportedly preparing an additional USD 2.6 billion (IDR 41.6 trillion) to deal with the possibility of a large fine imposed by regulators.

This action is part of the bank's efforts to complete an investigation into allegations that they have been used by organized crime groups from China to launder narcotics proceeds worth US$650 million (Rp10.4 trillion) between 2016 and 2021.

According to a Reuters report, TD Bank has prepared more than US$3 billion (Rp48 trillion) in anticipation of an yet-to-be-announced fine. To reduce the financial impact, the bank is also selling part of its shares in Charles Schwab. This move is part of a bank strategy to mitigate the financial impact of ongoing investigations.

Earlier this year, it was revealed that TD Bank was in talks with three US regulators, including the Department of Justice (DOJ), regarding their deemed inadequate Anti-Money Laundering (AML) program.

In a statement issued in May, TD Bank acknowledged that their AML controls failed to detect the drug trafficking activity that occurred. In addition, a former bank employee is also suspected of accepting bribes to facilitate the transaction.

In the latest release of earnings, TD Bank reported a loss of US$181 million (Rp2.9 trillion) in the third quarter of this year due to the impact of civil and criminal investigations related to their AML program.

CEO of TD Bank, Bharat Masrani, stated that correcting the shortcomings in the bank's AML program is one of its top priorities. "We recognize the seriousness of the shortcomings in our AML program in the US and the work needed to fulfill our obligations and responsibilities is very important for me, our senior leaders, and our boards," Masrani said.

TD Bank also expects a global resolution over the regulatory investigation by the end of this year. The US-based branch of TD Wilmington, Delaware, has more than $370 billion in assets managed and is currently the tenth largest commercial bank in the US.