The recent collapse of TD Bank may be linked to two anonymous cryptocurrency companies in Colombia and the United Kingdom.
On October 10, the US branch of TD Bank agreed to pay over $3 billion in fines and accept growth restrictions in the US to resolve allegations related to the improper monitoring of money laundering activities by criminal groups.
According to a report by the Financial Crime Enforcement Network (FinCEN) released on October 10, over $1 billion in total bank transfers by TD Bank were related to two unnamed cryptocurrency companies. The transactions were carried out by an unnamed entity, only identified as "Customer Group C," which appeared to operate in the financial sales and real estate sectors.
The FinCEN report stated:
"Customer Group C conducted over $1 billion in transactions through TD Bank during the relevant period, with over 90% of the funds originating from a cryptocurrency exchange based in the United Kingdom and over 60% of the outbound transactions being wire transfers to a financial institution in Colombia, which also provided virtual asset-related services."
Consent order imposing civil monetary penalty. Source: FinCEN
According to FinCEN, the aforementioned customer group conducted an average of over $100 million in wire transfers per month, largely "facilitating third-party cryptocurrency transactions," in high-risk areas such as Colombia, China, and the Middle East.
TD Bank facilitated over $650 million in transactions from an international cryptocurrency exchange
TD Bank facilitated over $650 million in bank transfers for "Customer Group C," received from an international cryptocurrency exchange.
According to FinCEN, this volume "significantly deviated" from the customer group's introductory materials. The report stated:
"During this period, Customer Group C received over $650 million from an international cryptocurrency exchange platform, the purpose, ultimate originator, and source of which were unknown to TD Bank."
Despite the unclear origin of the funds, TD Bank continued to process the transactions, including facilitating over $420 million to a "financial institution providing cryptocurrency services in the high-risk region of Colombia."
TD Bank had previously shut down its cryptocurrency unit in 2023
TD Bank had briefly ventured into the cryptocurrency space. TD Cowen, an independent US investment bank, launched Cowen Digital in March 2022 to provide institutional clients access to the cryptocurrency market through 16 cryptoassets, including Bitcoin (BTC) and Ether (ETH).
TD Cowen's cryptocurrency unit was shut down in June 2023, without disclosing the reasons behind the closure.
Cowen Bank was acquired by TD Bank Group for $1.3 billion in August 2022, with the deal completed in March 2023, three months before the cryptocurrency unit was shut down.
The closure came amid the collapse of several cryptocurrency companies last year and the banking and legal crisis in the US in 2023.
The Silvergate Crisis: What Does This Mean for Crypto? Source: YouTube
