A U.S. regulator has ordered TD Bank to pay $28 million USD over consumer credit reports claiming that the bank provided inaccurate, negative information about customers to credit reporting agencies, which could have a harmful impact on customers’ credit scores. This payout includes $20 million in the form of a U.S. civil fine as well as $7.76 million in restitution to tens of thousands of customers.
According to the Consumer Financial Protection Bureau (CFPB), TD Bank has repeatedly provided this inaccurate information, including errors about personal bankruptcies and credit card delinquencies, as well as fraudulent account activity for years, also noting that the bank took “far too long” to make necessary corrections to these mistakes, failing to investigate and resolve some consumer disputes.
A representative of the bank has noted that the institution had “self-identified” the issues long before the settlement and that actions had been taken to implement the necessary steps to resolve issues with its dispute-handling practices.
This is the latest trouble for TD Bank as it continues to face scrutiny surrounding its anti-money laundering program, which has also subjected the bank to monetary penalties in Canada and the U.S. The bank admitted to failing to take action to prevent criminals from using its branches to launder money, and as such, remains under investigation.
In Canada, the bank has also seen its share of issues, but last month a submission from the Canadian Bankers Association (CBA) to the House of Commons Standing Committee on Finance called for stronger regulation and reporting pertaining to the prosecution of money laundering in Canada, particularly when it comes to the Financial Transactions and Reporting Analysis Centre of Canada (FINTRAC).
FINTRAC was formed in 2000 to combat money laundering and terrorist activity financing and to provide oversight of thousands of businesses and banks by reporting any suspicious transactions. The submission noted that the continuous addition of regulations creates higher compliance costs at the detriment of competitiveness. The association also highlighted the number of individual reports that FINTRAC receives and how this high-volume reporting is not resulting in a higher rate of money laundering convictions.
Beyond offering a criticism of the reporting systems, CBA offered potential solutions to improve the system, including a call to the government to fulfill its promise to create a Canadian Financial Crime Agency that could undertake investigations and prosecute when necessary to add transparency to the process.
