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Regulators Express Concerns on TD Bank’s AML Practices Leading to Merger Termination to Acquire First Horizon Bank

Richard M. MAY 9, 2023 1 minute read

TD Bank was being examined by the Office of the Federal Reserve and the Comptroller of the Currency (OCC), with regards to the handling of unorthodox transactions and prompt reporting of illegal and suspicious activity to them, reported by The Wall Street Journal on May 8th.

The First Horizon Bank acquisition plans were terminated after regulators raised concerns about TD Bank’s AML/CFT practices. A joint statement released by TD Bank and First Horizon stated that the decision was reached because TD did not have a timetable for obtaining regulatory approvals for the $13.4 billion merger.

Upon being contacted for further details, the Federal Reserve, First Horizon, and the OCC declined to comment on the report. Additionally, TD Bank declined to make any additional remarks beyond those conveyed in the Wall Street Journal (WSJ) piece.

A TD Bank spokesperson told the WSJ, “TD works diligently to prevent criminals from using the bank for illegal activity, to strengthen its risk management programs on an ongoing basis, and to protect the interests of our customers, the bank and the financial system.”

In a joint statement, they said, “Because there is uncertainty as to when and if these regulatory approvals can be obtained, the parties mutually agreed to terminate the merger agreement.”

It was announced in February 2022 that the two banks would merge, thus creating the sixth-largest bank in the United States. Reuters reported at the time that TD Bank intended to use the deal to expand across the southern United States. Additionally, a number of US legislators opposed the proposed agreement.

Congresswoman Elizabeth Warren (D-Mass.) led a group of lawmakers who asked the OCC to halt the purchase in June 2022. The legislators stated in a letter to the OCC that TD Bank used point systems, bonuses, and threats of termination to encourage employees to open customer accounts and enrol in overdraft protection programs.

A TD Bank spokesperson responded to the inquiry by refuting the allegations. “Our business is built on a foundation of ethics, integrity and trust,” the statement said.

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