TD Bank’s recent collapse may be linked to two unnamed cryptocurrency companies in Colombia and the UK.
On October 10, TD Bank’s U.S. arm agreed to pay a fine of more than $3 billion while accepting limits on its U.S. growth trajectory while resolving charges related to inadequate monitoring of money laundering by criminal groups.
According to a report released by the Financial Crimes Enforcement Network (FinCEN) on October 10, more than $1 billion in TD Bank transfers were linked to two unknown cryptocurrency companies. The transaction was carried out by an unknown company identified only as ‘Client Group C’, which is said to be in the ‘sales finance and real estate industry’.
The FinCEN report states:
“Customer Group C conducted more than $1 billion in transactions through TD Bank during the period, with over 90% of incoming funds from UK-based cryptocurrency exchanges and over 60% of outgoing transactions being sent to Colombian financial institutions. We also provide services related to virtual assets.”
Consent Order Imposing a Civil Penalty. Source: FinCEN
According to FinCEN, the above-mentioned group of customers conducted an average of more than $100 million in wire transfers per month, many of which “facilitated explicit third-party cryptocurrency transactions” in “high-risk” jurisdictions such as Colombia, China, and countries. Middle East.
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TD Bank has facilitated over $650 million worth of transactions on international cryptocurrency exchanges.
TD Bank facilitated bank transfers worth $650 million for “customer group C” from an international cryptocurrency exchange.
According to FinCEN, this type of volume is a “significant departure” from the customer group’s onboarding documentation. The report adds:
“During this period, Customer Group C received more than $650 million from an international cryptocurrency exchange platform, the purpose, ultimate origin, and source of funds were unknown to TD Bank.”
Despite the source of the funds being unknown, TD Bank continued to process transactions, including providing more than $420 million to “financial institutions providing cryptocurrency services in high-risk jurisdictions in Colombia.”
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TD Bank closed its former cryptocurrency division in 2023.
TD Bank previously dabbled in the cryptocurrency space for a short period of time. TD Cowen, an American independent investment bank, launched Cowen Digital in March 2022 to provide institutional clients with exposure to cryptocurrency markets across 16 crypto assets, including Bitcoin (BTC) and Ethereum (ETH). .
TD Cowen’s cryptocurrency division closed in June 2023, without giving a reason for the closure.
Cowen Bank was acquired by TD Bank Group for $1.3 billion in August 2022 in a deal that was completed in March 2023, three months before the cryptocurrency division was shut down.
The closure comes amid the U.S. banking and regulatory crisis of 2023, which led to the bankruptcy of several cryptocurrency companies last year.
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