On Thursday, U.S. Attorney General Merrick Garland announced that TD Bank has agreed to pay a record-breaking $3 billion in penalties after pleading guilty to charges of facilitating money laundering. The fine, spread across multiple financial regulators, makes TD the largest bank to face such charges under anti-money laundering laws. However, in a familiar pattern, none of TD Bank’s senior executives are facing jail time—at least for now.
This outcome is reminiscent of past banking scandals, including the 2008 financial crisis, where the Feds sent just one mid-level Credit Suisse employee to jail, while top executives largely avoided prosecution. Legal experts see this as part of a long-standing trend in which banking executives skirt criminal liability despite their banks being implicated in serious misconduct.
“Bank executives have largely avoided jail time even when their banks face significant criminal penalties,” said Yesha Yadav, a law professor at Vanderbilt University. “It’s not surprising here that TD’s executives will escape personal criminal liability despite the scale of rule-breaking at the bank.”
The TD Bank case stands in stark contrast to how the Justice Department handled the crypto giant Binance a year ago. In that case, the DOJ not only imposed a $4 billion fine but also prosecuted Binance founder and CEO, who served a four-month sentence in a federal penitentiary. The disparity between the treatment of traditional banks and crypto firms has raised questions about the legal system’s double standards.
Lax Monitoring and Systemic Failures at TD
TD’s failure to implement effective anti-money laundering controls allowed over $670 million in illicit funds to flow through its platform, much of it linked to international drug cartels. According to the Department of Justice (DOJ), 92% of TD’s transaction volume went unmonitored for nearly seven years, allowing massive amounts of cash to be deposited and wired out without scrutiny. Emails between TD managers even revealed executives joking about the need to “shut this down.”
Garland made it clear that TD’s senior leadership played a central role in the misconduct, as the bank prioritized growth over compliance. The bank is now under an asset cap in the U.S., meaning it cannot take on new business until its compliance programs meet regulatory standards. TD shares have already dropped 10% in the wake of the scandal, the largest two-day loss for the bank since the 2020 market crash.
A Familiar Pattern of Leniency for Bank Executives
While TD has agreed to the penalties, the lack of criminal charges for its executives has drawn criticism. Legal experts argue that bankers often receive more lenient treatment than other industries when it comes to personal accountability. This leniency can be traced back to the financial crisis of 2008, when only a handful of individuals were prosecuted despite widespread fraudulent activities across the banking sector.
This trend has persisted. As ProPublica journalist Jesse Eisinger explained in his book The Chickenshit Club, federal prosecutors have become increasingly hesitant to pursue jail time for banking executives, citing challenges such as the overturning of convictions in the Arthur Andersen-Enron case and the revolving door between the DOJ and high-powered law firms.
However, the DOJ’s handling of Binance and other high-profile cases involving individuals like Elizabeth Holmes and Sam Bankman-Fried may signal a shift toward holding executives more accountable. Garland did emphasize that investigations into individual TD Bank employees are ongoing, and more charges may be forthcoming.
“Our criminal investigations into individual employees at every level of TD Bank are active and ongoing,” Garland said. “No one involved in TD Bank’s illegal conduct will be off-limits.”
Will This Case Signal a Turning Point?
Under the Biden administration, the DOJ has emphasized its commitment to individual accountability. Deputy Attorney General Lisa O. Monaco, in a 2022 speech, highlighted the importance of prosecuting individuals alongside corporate resolutions. However, whether the TD Bank case will follow this trend remains to be seen.
For now, the $3 billion fine serves as a historic financial penalty, but questions remain about whether TD executives will face personal consequences. As the investigation continues, the banking world is watching closely to see if this case will break the long-standing tradition of executives escaping serious punishment for their banks’ misconduct.