TD Bank Appoints Guidepost Solutions for AML Compliance Oversight

TD Bank has appointed consulting firm Guidepost Solutions as its independent monitor to oversee the banks efforts to strengthen its anti-money laundering (AML) systems. This decision comes after the Canadian bank pleaded guilty in October to charges of failing to implement adequate AML controls, resulting in a $3 billion settlement with U.S. regulators.

The U.S. Justice Department and the Treasury Department‘s Financial Crimes Enforcement Network (FinCEN) jointly selected Guidepost Solutions for the role. During TD Bank’s recent earnings call, Leo Salom, the banks U.S. head, expressed optimism about working with the firm to address compliance shortcomings.

As part of its settlement, TD Bank agreed to retain an independent third party to monitor its AML remediation program. The bank also accepted growth restrictions in the U.S. and agreed to pay significant penalties. The Justice Department mandates a three-year monitoring period, while FinCEN requires oversight for four years.

The Office of the Comptroller of the Currency (OCC), TD Banks primary U.S. regulator, revealed that the bank processed hundreds of millions of dollars in suspicious transactions, creating opportunities for money laundering, terrorist financing, and other illicit activities. For example, between 2019 and 2023, TD Bank allowed three money-laundering networks to transfer over $670 million through its accounts.

A FinCEN spokesperson confirmed Guidepost‘s appointment, while the U.S. attorney’s office for the District of New Jersey, which handled the case, declined to comment.

Salom emphasized that AML remediation is TD Banks “top priority.” The bank has already taken steps to improve its compliance program, including hiring additional AML specialists and implementing technological upgrades. These changes include consolidating investigative cases into a single case management system and developing machine learning tools to identify suspicious activities. These capabilities are expected to be operational by the third quarter of this year.

“There is still much to do, and this is a multiyear process, but we remain unwavering in our commitment to building the AML program we need,” Salom stated during the earnings call for the quarter ending January 31.

In the wake of the settlement, TD Bank also reshuffled its executive leadership. Former CEO Bharat Masrani stepped down two months earlier than planned in January, and Raymond Chun, the former chief operating officer, assumed the CEO role on February 1. Additionally, the bank reduced executive payouts and restructured its board.

The appointment of Guidepost Solutions marks a critical step in TD Banks efforts to restore trust and comply with regulatory requirements. However, the road to full remediation remains long, with ongoing oversight and quarterly updates expected in the coming years.