FinCEN alleges TD Bank failed to report suspicious crypto activity amid $3 billion money laundering penalty

The Financial Crimes Enforcement Network (FinCEN) alleged the banking giant TD Bank did not report suspicious activity from an unnamed customer group dealing with international cryptocurrency transactions.

FinCEN said TD Bank processed over 2,000 transactions from a firm called "Customer Group C," identified as "purportedly operating in the sales finance and real estate industries," over a nine-month period. Customer Group C misrepresented their intended international wire activity to TD Bank, stating it would not exceed $1 million in annual sales. In reality, Customer Group C purportedly enacted over $1 billion in transactions through TD Bank.

In addition, Customer Group C brought in 90% of its funds from a UK-based crypto exchange and sent out 60% of its funds to Colombian financial institutions with services related to digital assets. Customer Group C did not list Colombia as part of the jurisdictions it would deal with during its onboarding with TD Bank, and went on to work with "high-risk industries and firms" in China and the Middle East as well.

"Despite the high volume of suspicious transactions and 'red flags' associated with high-risk jurisdictions and rapid movement of funds within a short timeframe, TD Bank failed to proactively report this suspicious activity until it received multiple law enforcement inquiries about Customer Group C," FinCEN wrote in the report .

FinCEN added that while TD Bank had some written policies for transactions dealing with digital assets, it added that "there is no evidence any enhanced controls were ever applied to Customer Group C’s extensive transactions with virtual asset service providers."

On Oct. 10, TD Bank pled guilty to Bank Secrecy Act violations and money laundering and will pay $1.8 billion in penalties, according to the United States Department of Justice. Additionally, FinCEN assessed a $1.3 billion penalty and imposed a four-year monitorship against TD Bank for the same violations. The $3.09 billion has been called the "largest penalty ever imposed under the BSA."