Catherine Leffert
3 min read
In This Article:
TD Bank Group plans to invest $1 billion over a two-year period to beef up its anti-money-laundering controls, after compliance failures led to historic regulatory penalties and handcuffed its U.S. growth.
The herculean compliance overhaul is TD's top priority, executives said Thursday, as the Toronto-based bank also juggles a new restructuring plan, the scaling back of its American business and growing economic uncertainty due to U.S.tariff policies.
"While we still have work to do, we remain on track with our planned remediation activities and are building the foundational AML program that we need for the years ahead," said Leo Salom, who leads TD's U.S. banking operations, on a call with analysts.
In October, TD agreed to pay $3.1 billion in penalties and was ordered to put U.S. asset growth on hold after allowing the movements of more than $670 million in dirty money through the bank.
The company had previously projected spending $500 million on anti-money-laundering remediation efforts during the fiscal year that ends in October, as it upgrades its training, analysis capabilities and protocols. On Thursday, TD Chief Financial Officer Kelvin Tran told analysts that the bank expects similar investments in the fiscal year that ends in October 2026.
Salom said during the call that he thinks the bank is making progress.
"We wanted to give the Street a sense of what 2026 was going to look like," Salom said. "The composition of spend might change a little bit. It might be a little less remediation, more validation work, more lookbacks, monitor costs, et cetera…. But we think the overall spend level is going to be similar."
Across the first two quarters of 2025, the bank has invested $196 million on the anti-money-laundering compliance efforts.
Salom said there will be an uptick in those expenses in the back half of the year as the company delves "into the meat of our remediation delivery programs." TD plans to deploy machine learning technology in the third quarter to "increase investigative productivity," along with additional reporting and controls for cash management activities.
The bank feels confident about its expense guidance for 2025 and 2026, and those costs will eventually decline "at some point in the future," Salom said.
TD also said Thursday that it's on track to meet its previous projection of a 10% reduction in U.S. assets by the end of October. At the end of April, the U.S. bank had about $399 billion of assets, putting it below the $434 billion cap imposed by the Office of the Comptroller of the Currency.
