Research Update: The Toronto-Dominion Bank Downgraded To 'A+/A-1' On Anti-Money Laundering Deficiencies; Outlook Is Stable

On Oct. 10, 2024, the Toronto-Dominion Bank (TD Bank) settled with U.S. authorities and regulators regarding previously disclosed anti-money laundering (AML) investigations on its two U.S. banking subsidiaries. Although the bank has already provisioned for most of the US$3.09 billion penalty and can maintain balance-sheet flexibility to serve its U.S. clients, we believe the asset cap on TD's U.S. subsidiary banks underscores the severity of the bank's AML-related deficiencies and failure of its operational risk management. We lowered our ratings on TD Bank by one notch to 'A+/A-1', as well as all associated issue ratings. Our stable outlook assumes that over the next two years, the bank will strengthen its AML operational risk management processes and controls as it works

...- On Oct. 10, 2024, the Toronto-Dominion Bank (TD Bank) settled with U.S. authorities and regulators regarding previously disclosed anti-money laundering (AML) investigations on its two U.S. banking subsidiaries. - Although the bank has already provisioned for most of the US$3.09 billion penalty and can maintain balance-sheet flexibility to serve its U.S. clients, we believe the asset cap on TD's U.S. subsidiary banks underscores the severity of the bank's AML-related deficiencies and failure of its operational risk management. - We lowered our ratings on TD Bank by one notch to 'A+/A-1', as well as all associated issue ratings. - Our stable outlook assumes that over the next two years, the bank will strengthen its AML operational risk management processes and controls as it works to meet the requirements imposed by U.S. regulators in a timely manner, that no further sizable fines or regulatory matters will emerge, and that the company's strategies to mitigate the asset cap won't meaningfully...

Research Update