Money laundering

Small Business Bank in Lennox, Kansas received another cease-and-desist order from the Federal Reserve for failing to comply with anti-money laundering and Bank Secrecy Act requirements for the second time in 14 months.

In its semiannual supervision and regulation report, the Federal Reserve flagged climbing loan delinquencies and a rising number of large bank citations for governance and controls.

The bank's U.S. operations will be closely monitored during a yearslong probationary period, during which any sign of backsliding could trigger swift punitive action.

Daria Sewell pleaded not guilty to possessing customers' personally identifiable information. The case adds to the Canadian bank's anti-money-laundering woes.

The plea agreement, which includes a fine of more than $1.4 billion, penalizes TD for systemic money laundering violations. "We have the ability to profit, and we should be able to profit, but not at the expense of the law," said U.S. District Judge Esther Salas.

An uptick in fines associated with anti-money-laundering failures demonstrates that U.S. banks still have much work to do in terms of optimizing their internal systems to identify and stop the flow of dirty money.

Sen. Elizabeth Warren said in a letter that the Department of Justice intentionally avoided threatening TD Bank's charter to operate. The Massachusetts Democrat also pressed the agency to prosecute bank executives.

The megabank disclosed that regulators are looking at its anti-money-laundering and sanctions compliance. Wells Fargo was recently hit with an enforcement action over similar matters.

TD Bank's guilty plea to extensive money-laundering charges last week did not include any criminal charges against individual bank executives. That absence has critics fuming, but experts say bringing charges against individuals isn't so easy.

For more than a decade, the bank allowed billions of dollars from illicit activities to flow through the U.S. financial system unchecked. Some are wondering why examiners didn't put a stop to it sooner.