For links to cryptocurrencies with the UK and Colombia, TD Bank fined $3 billion
Because of its participation in enabling transactions connected to cryptocurrency exchanges in the United Kingdom and Colombia, TD Bank has agreed to pay a staggering $3 billion punishment. The fee is part of a settlement meant to cover the bank’s poor surveillance of possibly illicit financial crimes like money laundering and other forms of fraud.
1. Bank moves connected to cryptocurrencies platforms
Two unidentified bitcoin platforms drew attention by flowing more than $1 billion worth of transactions via TD Bank’s U.S. branch. Claiming to be engaged in sales finance and real estate, but in reality they were enabling bitcoin transfers, the customer group “Customer Group C” handled the transactions according to the Financial Crimes Enforcement Network (FinCEN).
FinCEN’s investigation indicates that while a Colombian financial institution offering cryptocurrency services received more than 60% of the departing transactions, a UK-based bitcoin exchange supplied 90% of the entering cash to Customer Group C.
2. Lack of control and high risk transactions
Over $100 million in monthly wire transfers were made by Customer Group C, many of which included trading cryptocurrencies in high-risk areas including Colombia, China, and areas of the Middle East. Red flags were raised when the volume of transactions much surpassed the records from TD Bank’s initial client onboarding.
TD Bank kept processing these transfers even though it was unclear about the source of the money or the names of the transaction participants. The bank helped this client group to complete over $650 million in transactions throughout the relevant time, including over $420 million in wire transfers routed to a Colombian financial institution offering bitcoin services.
3. Stopping the Crypto Unit of TD Bank
Previously active in the bitcoin market through its subsidiary TD Cowen, which debuted Cowen Digital in 2022, TD Bank The portal gave institutional investors access to Ethereum and Bitcoin among other digital assets. But barely three months after completing its $1.3 billion acquisition of Cowen, TD Bank had shockingly closed its cryptocurrency section by June 2023.
Rising regulatory difficulties and the demise of numerous big bitcoin firms in 2022 helped to explain the closing. Many business analysts assume that these elements, together with increasing American monitoring of the bitcoin market, led TD Bank to change its engagement in digital assets.
4. Crypto transaction regulatory pressure
The situation of TD Bank draws attention to the continuous challenges conventional banks have negotiating the complexity of bitcoin transactions. Banks have to tighten policies to stop illicit activity like money laundering as financial authorities demand more to track digital assets.
The TD Bank case emphasizes the necessity of increasing openness in the bitcoin industry as well as the need of better control to fight financial crime.
