Top Canadian bank under observation after billion-dollar US settlement
Norway’s US$1.9 trillion sovereign wealth fund has placed Toronto-Dominion Bank under observation for four years following a record money laundering settlement, citing ongoing concerns over financial crime risks.
According to a Bloomberg report, Norges Bank Investment Management, which oversees the Government Pension Fund Global, said the move is based on a March recommendation by the Council on Ethics. The advisory body flagged TD’s US$3.09 billion fine in 2024 for anti-money laundering failures in the United States as part of its assessment.
The Canadian bank had pleaded guilty to violating the US Bank Secrecy Act after prosecutors found it failed for over a decade to report suspicious transactions. A previous fine in 2013 was also cited by the ethics council, which said TD may have been connected to multiple cases of financial crime over a 10–15-year period.
There is “an unacceptable risk that the company contributes to or is responsible for gross corruption or other serious financial crime,” the council wrote.
TD Bank has since undertaken significant leadership changes and implemented a broad internal reform plan. “TD has made sweeping changes to its management in recent times and has adopted an ambitious plan for improvements,” the council stated. However, it added that “the extent to which these plans will be realized within the indicated time period remains uncertain.”
Norges Bank noted that it had not independently verified all elements of the ethics council’s findings but determined that the conclusions warranted placing TD under observation. The decision allows the fund to monitor the bank’s progress without immediately divesting its 1.05% stake, held as of the end of 2024, Investing.com reported.
The observation status is used sparingly by the fund and applies to firms facing risks related to corruption, human rights abuses, or severe environmental damage. TD will remain under scrutiny until at least 2029, when the council will reassess the effectiveness of the bank’s reforms and determine whether the risk of financial wrongdoing has been adequately mitigated.
