Money laundering

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.

Regulators' asset cap on TD Bank for money-laundering violations has cemented the enforcement tool as a supreme cudgel to rein in problem banks, while other tools devised in the wake of the Great Financial Crisis gather dust.

The Canadian bank is indefinitely prohibited from growing assets at its two U.S. subsidiaries as the result of a sweeping settlement over money-laundering violations. While only the second imposition of such a penalty ever, experts say it will not be the last.

The sweeping enforcement actions will be a watershed event for TD Bank's U.S. subsidiary, which had previously been a promising growth engine.

Regulators have never held a hearing on whether to revoke the charter of a bank convicted of a money-laundering-related violation. As TD Bank nears a "global resolution" in connection with its compliance failures, it's unlikely to buck the trend.

The Federal Reserve has lifted a 2013 order relating to anti-money-laundering compliance issues, including in the megabank's now-defunct Banamex USA unit.