Regulators’ Concerns About TD Bank’s AML Practices Reportedly Ended Merger

Regulators’ concerns about TD Bank’s anti-money laundering (AML) practices reportedly ended its plans to acquire First Horizon Bank.

The concerns of the Office of the Comptroller of the Currency (OCC) and the Federal Reserve centered on TD Bank’s handling of unusual transactions and its timeliness of reporting suspicious activity to them, The Wall Street Journal (WSJ) reported Monday (May 8), citing unnamed sources.

Reached by PYMNTS, First Horizon, the Federal Reserve and the OCC told PYMNTS via email that they had no comment on the report.

TD Bank said it had no additional comments beyond what was included in the WSJ article.

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.”

TD Bank and First Horizon called off their planned $13.4 billion merger on Thursday (May 4), saying in a joint statement that the decision came after TD told First Horizon that TD didn’t have a timetable for regulatory approvals.

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

The planned merger — which would have created America’s sixth-largest bank — was announced in February 2022.

TD Bank had intended the deal to fuel its expansion across the Southeastern United States, Reuters reported at the time.

The proposed deal also faced opposition from some U.S. legislators.

A group of lawmakers led by U.S. Sen. Elizabeth Warren (D-Mass.) asked the OCC in June 2022 to halt the planned purchase.

In a letter to the OCC, the lawmakers said that TD Bank used a point system and bonuses to incentivize workers to open customer accounts and opt into overdraft protection, with workers under threat of being fired if they failed to meet their goals.

In a statement emailed to PYMNTS at the time, a TD Bank spokesperson refuted the allegations.

“Our business is built on a foundation of ethics, integrity and trust,” the statement said.