Greg Kilminster
Head of Product - Content
TD bank fined more than $3 billion in unprecedented regulatory action
A coordinated regulatory and enforcement action has led to substantial penalties and sanctions against TD Bank, NA, TD Bank USA, and their parent company, Toronto-Dominion Bank. The action involves the US Department of the Treasury's Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board, and the Department of Justice (DOJ). Collectively, the penalties exceed $3 billion, stemming from severe anti-money laundering (AML) and Bank Secrecy Act (BSA) violations.
Some context
TD Bank's systemic AML failures allowed criminal organisations to exploit its services for drug trafficking, human trafficking, and terrorist financing. The banks neglected fundamental AML obligations over an extended period, prioritising growth over compliance. The penalties imposed reflect the egregious nature of these violations, marking a watershed moment in financial regulation and enforcement in the United States.
Key takeaways
FinCEN’s unprecedented penalty: FinCEN levied a $1.3 billion fine against TD Bank, the largest ever imposed on a US depository institution. The penalty addresses significant BSA violations and mandates a four-year independent monitorship to oversee the remediation process. FinCEN highlighted the scale of TD Bank’s AML failures, noting that these allowed criminal transactions worth billions to go unchecked.
OCC sanctions and restrictions: The OCC issued a cease and desist order alongside a $450 million penalty, citing TD Bank's persistent deficiencies in BSA/AML compliance. The OCC has imposed an asset cap on TD Bank, restricting its growth until it can demonstrate compliance improvements. The OCC’s findings included lapses in internal controls, customer due diligence, and transaction monitoring.
Federal Reserve Board’s fine and compliance directive: The Federal Reserve Board fined TD Bank $123.5 million and mandated the establishment of a dedicated US AML compliance office. The order requires TD Bank to relocate its AML programme to the United States, signalling increased scrutiny and oversight of foreign banks with US operations.
DOJ’s criminal resolution: The DOJ’s action resulted in TD Bank pleading guilty to BSA and money laundering conspiracy violations. The plea agreement, amounting to $1.8 billion, addresses TD Bank’s role in facilitating criminal transactions. The bank has agreed to a three-year independent monitorship, including an in-depth review of its board and management oversight.
Next steps
TD Bank faces a lengthy and complex remediation process. Regulatory oversight will extend for several years, with independent monitors appointed to ensure compliance improvements. These actions underscore the growing resolve of US authorities to hold financial institutions accountable and signal heightened expectations for AML compliance. Financial institutions must ensurer their AML programmes are comprehensive and robust enough to avoid similar egregious penalties.
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Australia outlines new scam prevention framework
In a speech at Maurice Blackburn Lawyers, Stephen Jones, Australia’s Assistant Treasurer and Minister for Financial Services, outlined a new legislative framework aimed at bolstering the nation’s defences against scams. Dubbed the Scams Prevention Framework, the policy proposes measures to protect Australian consumers across multiple sectors, including telecommunications, digital platforms, and banking. This new approach, Jones asserted, will create “one of the toughest targets for scammers” in the world.
The cost of inaction
Jones opened by describing the recent and rapid rise in scam-related losses, which saw Australian consumers lose $3 billion in 2022. This marked a significant increase from previous years, as scam losses doubled year-on-year.
The framework’s guiding principle is prevention. Jones emphasised that while enforcement remains a critical component, the priority must be “to have a wall of separation between scammers and their targets” from the outset. “We can’t wait until a victim is scammed. The emotional and financial cost is too much to let that happen,” he argued, highlighting the preventative nature of the proposed measures.
Three pillars of protection
Jones outlined three central components of the government’s anti-scam strategy:
- building government capacity,
- blocking avenues for scammers, and
- increasing regulatory powers.
He highlighted the National Anti-Scam Centre (NASC), established in 2022, as the cornerstone of these efforts. The NASC brings together various government agencies and private-sector participants, sharing intelligence in near real-time to detect and disrupt scam activity before it reaches consumers.
“We’re also cutting off the avenues for scammers directly,” Jones said, referring to the new SMS ID Registry and a blacklist of phone numbers used for scams. These tools have already had a tangible impact, with Australian authorities blocking an average of 1 million scam calls and texts per day.
The Minister also pointed to increased powers for the Australian Securities and Investments Commission (ASIC) and the NASC to shut down scam websites. Last year alone, ASIC took down more than 7,300 phishing and investment scam sites, which Jones credited with helping to stem the tide of fraudulent activity.
Raising the bar for businesses
At the heart of the Scams Prevention Framework is a new set of obligations for businesses across key sectors, including banking, telecommunications, and digital platforms. “The legislation creates new principles-based obligations on industry to take reasonable steps to prevent, detect, report, disrupt, and respond to scams,” Jones stated. These measures will be backed by strict regulatory oversight, with significant penalties for non-compliance.
In a move away from a one-size-fits-all approach, Jones explained that the framework would enable the government to tailor obligations to the specific risks faced by each sector. For example, banks will need to introduce mandatory confirmation of payee protocols to prevent fraudulent transfers, while telecommunications companies will be required to block known scam numbers. Digital platforms, meanwhile, will be tasked with verifying advertisers and swiftly taking down scam pages.
“This is good for businesses that want to legitimately communicate with customers. And it’s good for Australians—taking our protections even further,” Jones said, positioning the framework as beneficial to both consumers and compliant businesses.
Enforcing accountability across the board
Jones also tackled the question of liability, acknowledging calls for an automatic reimbursement model that would place the onus for compensation solely on banks. He raised concerns, however, that this approach could end up disproportionately benefiting scammers. “The first problem is that it does not require proactive steps to prevent the scam from occurring in the first place,” he explained, stressing that shared accountability across all sectors is essential.
Instead, the framework aims to establish a standard for fault and liability. “If an institution does not meet the standard at law, they absolutely should be held responsible for the financial loss of a victim,” he said, underscoring the principle that businesses must be held accountable for lapses in their own scam prevention measures.
Jones went further, criticising proposals that would allow large digital platforms to evade responsibility while banks bear the financial burden. Citing examples, he questioned the fairness of a system where platforms such as Facebook profit from fraudulent ads while small banks bear the cost of compensating victims. “How is it fair that a bank… is held liable, while Meta—one of the largest companies in the world—gets off scot-free?” he asked.
Towards a shared goal
Jones made it clear that while banks, telcos, and digital platforms are the initial focus, the framework is designed with future expansion in mind. He emphasised the need for an industry-wide shift in culture, urging sectors not yet targeted by the legislation to take proactive measures. “Don’t wait to be told to do more. You owe it to Australians to do more,” he cautioned.
Ultimately, the framework aims to foster a culture of prevention, with Jones reinforcing that businesses have a duty to protect consumers. “This is how we work together individually and collectively to keep Australians’ money safe,” he concluded, framing the Scams Prevention Framework as both a significant regulatory development and a collective responsibility.
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DFSA adjusts fees following consultation feedback
In response to stakeholder feedback on its consultation paper (CP157) regarding fee adjustments, the Dubai Financial Services Authority (DFSA) has issued a statement outlining changes to its fee structure. The revised fees, approved by the DFSA Board, will take effect on 1 January 2025.
Key fee adjustments
- Annual fees for additional services: The DFSA confirmed an increase in the annual fee for each additional financial service, rising from USD 1,000 to USD 4,000. Although some respondents questioned the proportionality, the DFSA argued that firms conducting multiple financial services require more oversight. The regulator noted that its fees had remained unchanged since 2017 and that the adjustment would better reflect regulatory demands.
- Fees for authorised individual applications: The DFSA will proceed with an increase from USD 500 to USD 750 for applications relating to Authorised and Key Individuals, and Audit Principals. While some commentators recommended a tiered approach, based on role specifics, the DFSA cited administrative efficiency as a reason to maintain a uniform fee structure.
- Business transfer scheme fees: The DFSA has introduced a flat fee of USD 30,000 for work related to business transfer schemes. Though stakeholders suggested calibrating the fee based on the DFSA’s workload or aligning it with DIFC Court fees, the DFSA chose a flat rate, emphasising transparency and administrative ease.
- Insurance management fee adjustment: Responding to feedback, the DFSA revised its proposed increase in the insurance management fee from USD 30,000 to USD 25,000, instead of the initially proposed USD 30,000. This adjustment reflects a balance between cost recovery and alignment with similar financial activities.
Next steps
The updated fees are now published in the revised Fees (FER) module, which accompanies the feedback statement. The DFSA has confirmed that these changes will be reflected in the 2025 fee invoices, ensuring all firms have clarity ahead of the new fee structure coming into force.
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TSB hit with £10.9m fine for mistreatment of customers in arrears
The Financial Conduct Authority (FCA) has imposed a £10.9 million fine on TSB Bank for failing to adequately handle customers experiencing financial difficulties. This sanction, reduced from an original £15.6 million through an early settlement discount, follows an FCA investigation into TSB’s treatment of retail customers between 2014 and 2020.
The FCA found that TSB breached two fundamental regulatory principles, failing both to maintain effective oversight of customer management and to treat customers in financial distress fairly. The bank has since paid nearly £100 million in redress to over 230,000 customers affected by its inadequate support for those facing financial difficulties.
Regulatory shortcomings
The FCA’s scrutiny revealed that TSB's issues were widespread, affecting customers across a range of products, including mortgages, credit cards, and loans under both TSB and Whistletree brands. The failings were most acute for vulnerable customers who fell into arrears, where the bank's systems and controls were deemed insufficient.
In response to these concerns, the FCA appointed an independent expert to assess TSB’s collections and recoveries operations. This review found that 55% of sampled customers received unfair treatment, often facing prolonged and inadequate support, which risked worsening their financial situation. The investigation also highlighted significant weaknesses in TSB’s governance and policies, particularly in the bank’s ability to provide consistent and fair customer care.
Therese Chambers, Joint Executive Director of Enforcement and Market Oversight, commented: “If you get into difficulty, you hope for – and we expect – fair treatment so a stressful situation isn’t made worse. TSB’s woeful systems and controls exposed its customers to risk of harm and meant it missed opportunity after opportunity to do the right thing. While it did take action, it took us instigating a review before it acted effectively to address all the issues.”
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