TD Sets Aside $450 Million in US Money-Laundering Investigation

Toronto-Dominion Bank has set aside $450 million in anticipation of potential fines related to US investigations into its anti-money laundering practices. The bank disclosed this provision in a statement released after markets closed on Tuesday, cautioning that the total cost of fines is still uncertain.

The second-largest bank in Canada is currently in discussions with three US regulators and the Department of Justice to resolve the matter. The $450 million provision is specifically related to talks with one of the regulators, with analysts estimating potential fines to range from $500 million to over $1 billion.

Jefferies Financial analyst John Aiken noted that the provision is not a definitive amount and that the remediation process could take several years. Toronto-Dominion acknowledged that its anti-money laundering program was inadequate and has been working to address these deficiencies.

The bank’s deal to acquire First Horizon Corp. was called off last year due to regulatory approval issues, and investors have been concerned about potential restrictions on future acquisitions and growth in the US. Toronto-Dominion has been investing heavily in improving its risk and control systems in the US.

The announcement of the provision comes ahead of the bank’s fiscal second-quarter results, which are set to be reported on May 23. Despite the uncertainty surrounding the potential fines, Toronto-Dominion remains confident in its ability to strengthen its AML program and continue serving its customers effectively.