It May Face Penalties Over Anti-Money Laundering Probe
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TD Says It May Face Penalties Over Anti-Money Laundering Probe

In response to US authorities’ inquiries into its anti-money laundering compliance program, TD Bank Group (TD.TO) said on Thursday that it anticipates paying fines and receiving “non-monetary” penalties.

The second-largest lender in Canada, TD, said as part of its quarterly earnings that it has been working with American authorities, particularly concerning a Department of Justice probe.

“The bank is cooperating with such authorities and is pursuing efforts to enhance its Bank Secrecy Act/anti-money laundering compliance program,” TD stated in the filing.

Although the final results of these inquiries and investigations are currently unknown, the bank expects financial and/or non-financial penalties to be levied.

Bharat Masrani, the CEO of TD, failed to respond to a query from an analyst on a provision for potential fines on Thursday during the post-earnings conference call.

Amid the U.S. regional banking crisis, the institution abandoned earlier this year its planned $13.4 billion acquisition of U.S. regional lender First Horizon.

TD said that it lost C$199 million on its stake in First Horizon in addition to paying a termination fee of C$306 million in May.

The acquisition’s problems will be resolved with authorities, TD CEO Bharat Masrani assured shareholders in June.

In a note, National Bank analyst Gabriel Dechaine wrote, “We believe the potential fallout from this issue could result in higher capital costs and higher investment spending to address the issue.” He was referring to the findings of the U.S. queries.

Some experts said that given its solid capital position, TD could afford to pay any potential punishment.

An inquiry for comments was not immediately answered by the US DOJ.

After missing expectations for its third-quarter profit, TD’s shares ended the day Thursday down 3%.

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