Norway's pension fund places the lender under observation for four years
Canadian lender Toronto-Dominion Bank (TD Bank) has been placed under observation for four years by Norway’s sovereign wealth fund Government Pension Fund Global, as reported by the Financial Post.
The decision was made by the Norges Bank Investment Management, which managed the wealth fund that was worth US$1.9 trillion, following the recommendation by the Council on Ethics in March, citing the 2024 money laundering settlement by TD Bank.
Last year, the lender had pleaded guilty for its failure to prevent money laundering and agreed to pay nearly US$3.1 billion in fines and other penalties. The bank was also found to have failed to root out suspicious activities under the Bank Secrecy Act for 10 years.
“The Board has not independently assessed all aspects of the recommendation but finds it sufficiently substantiated that the observation criteria have been fulfilled,” Norges Bank Investment Management said in a statement.
According to the Council on Ethics’ recommendation, TD, which offers institutional funds through TD Asset Management and TD Securities, still needs to be observed despite the moves it has been making to improve its controls and culture.
“TD has made sweeping changes to its management in recent times and has adopted an ambitious plan for improvements. The extent to which these plans will be realised within the indicated time period remains uncertain, especially in light of the significant amount of work that remains to be done to create a good compliance culture within the company,” it said in its recommendation.
- TDAM manages $487 billion in assets (as of December 31, 2024).
- TD Bank originates from the merger of The Bank of Toronto (founded in 1855) and The Dominion Bank (founded in 1869), with the formal amalgamation occurring on February 1, 1955.
- TD Bank is the second-largest bank in Canada by assets, with total assets exceeding CA$2.06 trillion as of October 31, 2024.
- It has the largest customer base among Canadian banks, serving 27.9 million customers, and was the largest employer in the sector with more than 95,000 employees globally.
Being under supervisions risks TD Bank reputation, confidence among investors, and potentially invites more scrutiny from global regulators, according to an article from fincrimecentral.com.
The Government Pension Fund Global is managed by Norges Bank on behalf of the Norwegian Ministry of Finance. It reviews companies for risks concerning environmental, social, and governance (ESG) and has the capacity to take action against those that are involved in serious offences concerning financial misconduct.
