Crypto Transactions Cost TD Bank $3B in Fines: Echoes of Operation Chokepoint?

Key Takeaways

• TD Bank failed to disclose suspicious activity relating to crypto transactions, according to FinCEN.
• Canada’s second-largest bank pleaded guilty to money laundering charges, agreeing to pay $3 billion in fines.
• The crackdown on TD Bank is likely to fuel further speculation of Operation 2.0.

The Financial Crimes Enforcement Network (FinCEN) has alleged that TD Bank failed to report suspicious activity relating to an anonymous customer group handling international crypto transactions.

The enforcement action comes just under one week after TD Bank became the largest bank in U.S. history to plead guilty to money laundering crimes.

TD Bank Pleads Guilty for Money Laundering

According to a report from FinCEN , TD Bank was fined over $3 billion after pleading guilty to violating the Bank Secrecy Act.

The fine is split between a $1.4 billion payout to the U.S. Department of Justice (DOJ), $1.3 billion to the Treasury Department’s Financial Crimes Enforcement Network, $450 million to the Office of the Comptroller of the Currency (OCC), and $123.5 million to the Federal Reserve.

In addition to the record fine, TD Bank has been placed under four years of independent monitoring and will not be able to enter a new market without approval from the OCC.

The U.S. government said the Canadian bank purposefully ignored red flags from high-risk customers to create a convenient environment for bad actors.

U.S. Attorney General Merrick Garland said the bank had chosen “profits over compliance in order to keep its costs down.”

‘Suspicious Activity’ With Crypto Exchanges

According to a report from FinCEN , TD Bank processed over 2,000 transactions to a company referred to as Customer Group C over nine months.

The U.S. government department claimed 90% of Customer Group C’s revenue came from a U.K. crypto exchange. FinCEN also disclosed that 60% of the funds were sent to financial firms offering digital assets in Columbia.

According to FinCEN, the transactions totaled upwards of $1 billion despite Customer C falsely reporting its annual sales would not exceed $1 million.

FinCEN claimed that there is no evidence that TD Bank imposed “any enhanced controls were ever applied to Customer Group C’s extensive transactions with virtual asset service providers,” despite having policies relating to digital assets.

Could This Be Part of Operation 2.0?

The move will likely fuel more fire to the Operation Chokepoint 2.0 conspiracy, a movement popularized by crypto social media platforms that suggest the SEC and other government firms are working to actively crack down on crypto.

The conspiracy is a sequel to the original Operation Chokepoint, launched by the Obama administration in 2013. This operation saw “an expansive investigation of banks and payment processors to combat consumer fraud by choking out fraudsters’ access to payment systems.”

Despite the program publicly ending in 2017, the SEC’s continued penalties on crypto companies and the closure of both Signature Bank and Silicon Valley Bank have kept the conspiracy alive.

In 2024 alone, crypto companies were fined $4.684 billion by the SEC.

However, with no concrete proof on either side of the argument, the debate on Operation 2.0’s involvement in the crackdown on crypto will continue.