Senators Demand Accountability from TD Bank Executives as Insider Arrested for Money Laundering

Senators Ron Wyden (D., Ore.) and Elizabeth Warren (D., Mass.) are turning up the heat on TD Bank, demanding answers about what its executives and employees knew regarding a sprawling money-laundering operation. This operation, spearheaded by Da Ying Sze—a Queens-based individual—funneled more than $470 million from drug sales through the bank. The senators’ inquiry, detailed in a letter to TD Bank CEO Bharat Masrani, signals ongoing scrutiny despite October’s record-breaking $3 billion settlement with the Justice Department.

The senators' letter, obtained by The Wall Street Journal and dated Monday, presses TD Bank to disclose internal knowledge and accountability for the systemic failures in its anti-money laundering (AML) controls. Their concern highlights lingering questions about whether the bank’s leadership has been sufficiently held to account for facilitating money laundering tied to fentanyl trafficking and other illicit activities.

A TD Bank spokesperson acknowledged the senators’ concerns and reaffirmed the bank’s commitment to improving its AML program, "TD has taken full responsibility for its AML program failures and is making significant investments to meet regulatory obligations and protect the financial system."

Systemic Failures & Cultural Lapses

Sze’s operations exploited glaring deficiencies in TD Bank’s controls. According to prosecutors, branch employees accepted gift cards as bribes to process suspicious transactions, and several employees were implicated in a separate money-laundering scheme tied to Colombia. Internal emails unearthed by investigators reveal staff joking about the scale of Sze’s activities, with one branch manager warning superiors that “it is getting out of hand.”

Despite such red flags, TD Bank executives allegedly failed to act decisively. Prosecutors cited an instance where the head of TD’s U.S. financial intelligence unit received multiple reports detailing Sze’s extraordinary volume of transactions but took no significant action. This lack of consequence for senior leaders prompted Wyden and Warren to question whether accountability at TD Bank extended beyond its rank-and-file employees.

Their letter isn’t the first critique aimed at TD Bank’s leadership. In October, Senator Warren expressed sharp dissatisfaction with the Justice Department’s settlement terms, arguing that the deal let TD Bank off lightly.

In a letter to Attorney General Merrick Garland and Deputy AG Lisa Monaco, Warren described the DOJ’s settlement as “absurd legal gymnastics” designed to shield TD’s top brass. She criticized the decision to forgo more serious charges that could have resulted in revoking TD’s U.S. banking charter—a so-called "banking death penalty." The settlement, Warren argued, allowed TD to absorb the penalties as a business expense without ensuring meaningful change at the executive level.

“This isn’t an acceptable outcome,” Warren wrote, urging prosecutors to prioritize individual accountability. Her letter echoed concerns from transparency advocates like Better Markets, who warned that penalizing institutions while sparing leadership only encourages repeat offenses.

Warren’s calls for reform align with global trends emphasizing individual accountability. The U.K.’s Senior Managers and Certification Regime (SM&CR), for example, requires financial leaders to take personal responsibility for governance failures, fostering a culture of compliance and integrity. By comparison, the U.S. system continues to grapple with holding senior executives accountable, as evidenced by the limited charges against TD Bank employees in this case.

Recent Developments: TD Bank Insider Arrested for Money Laundering

This pushback from Senators Wyden and Warren comes amid a recent arrest of a former TD Bank employee. Leonardo Ayala, 24, was arrested on charges of facilitating money laundering through the bank to Colombia. Ayala, who worked at a TD Bank branch in Doral, Florida, allegedly assisted a money laundering network by issuing debit cards for shell company accounts in exchange for bribes. These accounts were used to launder millions of dollars in drug proceeds via ATM withdrawals in Colombia.

This arrest underscores the ongoing issues within TD Bank’s operations and highlights how the culture of systemic lapses within the bank may have allowed such crimes to flourish. With Ayala facing charges for his role in facilitating the laundering of narcotics proceeds, the bank’s internal failings are coming under even greater scrutiny.

A Crossroads for the Banking Sector

The TD Bank saga illustrates a critical crossroads for the banking sector. Will institutions embrace a culture of accountability that goes beyond financial settlements, or will regulators need to impose stricter measures to ensure executive responsibility? As Warren’s critique gains traction, it may catalyze a broader shift in how regulators and compliance leaders address corporate misconduct.

For now, the industry watches as TD Bank’s response to the senators’ inquiries—and any subsequent regulatory action—unfolds, shaping the next chapter in the fight against financial crime.

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