How a fentanyl crime ring used a Canadian bank to do business | About That

[♪♪♪] >> Andrew: IMAGINE THIS. YOU ARE AT A BANK AND YOU SEE SOMEONE WALK IN WITH SEVERAL LARGE BAGS. THEY GO UP TO A TELLER AND FROM THESE BIG BAGS, THEY PULL OUT THESE BIG BUNDLES OF CASH. THEN THEY IMMEDIATELY GET THE BANK TO TURN THAT CASH INTO CASHIERS CHEQUES, A WHOLE BUNCH OF THEM, MADE OUT TO DIFFERENT PEOPLE, DIFFERENT BUSINESSES. WOULD YOU THINK SOMETHING IS UP? THERE IS A GROUP OF PEOPLE CHARGE IN THE UNITED STATES FOR DOING EXACTLY THAT, LAUNDERING HUNDREDS OF MILLIONS OF DOLLARS OF DRUG MONEY THROUGH BANKS FOR YEARS. IT TURNS OUT THAT THERE IS A CANADIAN BANK AT THE CENTRE OF IT ALL. >> IT LOOKS LIKE THE HAMMER IS ABOUT TO COME DOWN ON T.D. BANK. >> APPARENTLY, ACCORDING TO THESE REPORTS. FENTANYL WAS INVOLVED. INVESTORS ARE NOT HAPPY TO HEAR ABOUT THAT. >> T.D. BANK WILL HAVE MAJOR PROBLEMS. >> Andrew: THEY'RE BEING INVESTIGATED BY THREE DIFFERENT U.S. REGULATORS AND THE DEPARTMENT OF JUSTICE. THEY COULD BE FACING BILLIONS OF DOLLARS IN FINES AND IT KNOWS THEY HAVE MAJOR PROBLEMS. THEY TOLD NEARLY 2,000 EXECUTIVES IN A RECENT CONFERENCE CALL THAT IT'S APPALLING THAT THESE CRIMINALS WERE ABLE TO BREAKTHROUGH OUR DEFENCES AND IT'S UNACCEPTABLE THAT WE WERE NOT ABLE TO STOP THEM. SO HOW ARE CRIMINALS ABLE TO FUNNEL INCREDIBLE AMOUNTS OF DIRTY MONEY THROUGH T.D. AND WHY IS T.D. BEING INVESTIGATED FOR LETTING IT HAPPEN? WE DUG THROUGH REAMS OF COURT RECORDS, MEDIA REPORTS, INTERNAL COMMUNICATIONS, WE SPOKE TO SOURCES CLOSE TO THE BANK TO TRY TO GET TO THE BOTTOM OF WHAT HAPPENED. LET'S GO THROUGH IT. HERE'S PART OF A MASS E-MAIL THAT T.D.'S C.E.O. SENT TO THE CORPORATION LAST WEEK. OUR ANTI-MONEY LAUNDERING PROGRAM DID NOT DELIVER. WE DID NOT MEET OUR EXPECTATIONS OR OUR REGULATORY OBLIGATIONS TO MONITOR, DETECT, REPORT, AND RESPOND TO SUSPICIOUS ACTIVITY. BANKS ARE REQUIRED BY LAW TO WATCH OUT FOR THINGS THAT MIGHT SIGNAL SOME SORT OF CRIMINAL ACTIVITY IS HAPPENING. THE U.S. BODY THAT OVERSEES BANKING REGULATIONS LAYS OUT A LIST OF RED FLAGS TO LOOK OUT FOR, INCLUDING WHEN A CUSTOMER ESTABLISHED MULTIPLE ACCOUNTS IN VARIOUS CORPORATE AND INDIVIDUAL NAMES AND WHEN DEPOSITS ARE STRUCTURED THROUGH MULTIPLE BRANCHES OF THE SAME BANK. ACCORDING TO COURT DOCUMENTS, THIS IS WHAT THE MONEY LAUNDERERS DID ON T.D. IN NEW YORK CITY, AGENTS TRACK ADD GROUP OF SUSPECTS IN A SUPERMARKET POSHTH PARKING LOT AND WATCHED AS THEY EXCHANGED FIVE LARGE BAGS. THEN THEY FOLLOWED ONE OF THEM AS SHE WENT INTO THREE SEPARATE T.D. BRANCHS, DEPOSITING CASH INTO DIFFERENT ACCOUNTS. WHILE THIS WAS HAPPENING, A BOX TRUCK WITH THE OTHER GROUP MEMBERS DROVE AROUND, DOING THE SAME THING. INVESTIGATORS SAY THAT THE GROUP DEPOSITED OVER $2.3 MILLION IN CASH THAT DAY ALONE WITHOUT ISSUE. ACCORDING TO THE COURT DOCUMENTS, THAT WASN'T AN UNUSUAL DAY FOR THEM. INVESTIGATORS SAY THEY WITNESSED A DOZEN OTHER DAYS LIKE THIS WHERE THE GROUP DROVE AROUND TOWN WITH THOUSANDS, HUNDREDS OF THOUSANDS, SOMETIMES MILLIONS OF DOLLARS IN CASH, DEPOSITING IT AT DIFFERENT BRANCHES VIRTUALLY ALL DAY, SPREADING SMALLER AMOUNTS OF CASH AROUND. THE EXPERTS SAID THIS IS THE DEAD SIMPLEST WAY TO GET DIRTY MONEY INTO A BANK. BANKS LIKE T.D. KNOW THIS AND YET IT WENT ON FOR YEARS. BANKS ARE ALSO MORE THAN JUST PASSIVE RECEPTACLES FOR YOUR MONEY. THERE IS A REQUIREMENT THAT THEY DO THEIR DUE DILIGENCE ON THEIR CUSTOMERS, ESPECIALLY WHEN A BIG CHUNK OF MONEY IS DEPOSITED, WHEN THE NATURE OF THE ACCOUNT HOLDER'S BUSINESS WOULD NOT APPEAR TO JUSTIFY SUCH ACTIVITY. >> YOU NEED TO KNOW WHAT PRODUCTS, GOODS, AND SERVICES THEY HAVE, WHAT JURISDICTIONS THEY'RE OPERATING IN, WHAT IS THEIR VOLUME OF SALES EXPECTED TO BE, THEIR INVENTORY AND SO ON. THE MORE YOU KNOW, THE MORE YOU ARE ABLE TO DETERMINE OR RISK ASSESS THESE BUSINESSES. >> Andrew: IF A BUSINESS IS DEEMED HIGH RISK OR THE BANK JUST CAN'T DIG UP ENOUGH INFORMATION ON IT, THEY ARE SUPPOSED TO MONITOR THEIR TRANSACTIONS EXTRA CLOSELY. IN THIS CASE, INVESTIGATORS LINKED MANY OF THE MONEY LAUNDERERS DEPOSIT TO 7 DIFFERENT SMALL BUSINESSES, BUT NOT THE KIND YOU WOULD EXPECT TO BE PULLING IN MILLIONS OR EVEN HUNDREDS OF THOUSANDS OF DOLLARS A DAY. THEY WERE MOSTLY SEWING COMPANIES, CLOTHING RELATED, FASHION RELATED, ALSO NONE OF THEM APPEAR TO HAVE ACTUAL STOREFRONTS OR WEBSITES. ACCORDING TO NEW YORK STATE'S BUSINESS DATABASE, MOST WERE OFFICIALLY REGISTERED TO THIS ADDRESS. IT'S A WAREHOUSE IN LONG ISLAND. PUT SIMPLY, PROSECUTORS SAY THEY WERE SHELL COMPANIES AND THEY SHOULD HAVE BEEN AT LEAST NOTICED. >> THE CLIENTS ARE MONITORING THEIR ACCOUNTS, ASSESSING THEIR RISKS. IT JUST SIMPLY FAILED. >> Andrew: BUT WHAT GOOD IS DEPOSITING HEAPS AND HEAPS OF CASH IF YOU CAN'T GET IT BACK OUT LATER? ONE WAY TO DO THAT AND THIS IS ANOTHER BIG RED FLAG FOR A BANK, IS WHEN A CUSTOMER PURCHASES A NUMBER OF CASHIER CHEQUES, MONEY ORDERS, FOR LARGE AMOUNTS. THIS IS WHAT THOSE CRIMINALS DID. THEY ORDERED MULTIPLE CASHIER CHEQUES AND HAD THEM MADE OUT TO DIFFERENT PEOPLE, DIFFERENT BUSINESSES. A CASHIER'S CHEQUE IS CERTIFIED BY THE BANK AND LOOKS MORE LEGIT THAN A GIANT STACK OF CASH. THE ANALYSTS WE SPOKE TO SAID THIS IS MONEY LAUNDERING 101, WHICH IS WHY BANKS ARE TOLD TO WATCH OUT FOR IT. INVESTIGATORS SAY THIS GROUP OF CRIMINALS WAS DOING THIS A LOT. >> THE AMOUNT OF CASHIER CHEQUES THAT WERE ORDERED AND PERSONAL CHECKS THAT WERE ORDERED, IT SHOULD HAVE RAISED EYEBROWS ENTER. >> Andrew: THEY WEREN'T HIDING IT. MEMBERS OF THE GROUP WOULD MOVE MILLIONS OF DOLLARS OUT OF THEIR ACCOUNTS IMMEDIATELY AFTER THEY DEPOSITED LARGE AMOUNTS OF CASH AND SOMETIMES THEY SEE THEM HAND THOSE CHEQUES TO THEIR ASSOCIATES INSIDE THE DETECT THESE TRANSACTIONS. >> Andrew: SO IT'S THE RESPONSIBILITY OF THE BANKS TO NOTICE WHEN THEY ARE BEING EXPLOITED AND THEN THEY HAVE TO REPORT NEAR SUSPICIONS THAT SOMETHING ILLEGAL IS HAPPENING. THEY'RE CALLED SUSPICIOUS ACTIVITY REPORTS AND THEY LOOK LIKE THIS. THERE IS A WHOLE SECTION HERE ON MONEY LAUNDERING, SUSPICION CONCERNING THE SOURCE OF FUNDS, SUSPICIOUS EXCHANGE OF CURRECUR. THEY HAVE TO FILL THIS OUT AND SEND IT TO THE AUTHORITIES WITHIN 30 DAYS. T.D. SAID THEY DID REPORT SOME OF THE ACTIVITY, THE C.E.O. SAID IT WAS NOT ENOUGH AND WE WERE JUST TOO SLOW. >> IT'S DISAPPOINTING. WE SHOULD BE VERY WELL SET UP TO CAPTURE AND DISMANTLE SCHEMES THAT ARE THIS SIMPLE. >> Andrew: NOW TO BE CLEAR, NOT ALL OF THE MONEY THIS GROUP WAS LAUNDERING MADE ITS WAY THROUGH T.D. INVESTIGATORS SAY THEY USED OTHER BANKS TOO. IT'S UNCLEAR IF THE D.O.J. IS INVESTIGATING THOSE BANKS. WE KNOW THAT THIS ISN'T EVEN CLOSE TO THE ONLY INVESTIGATION T.D. IS DEALING WITH RIGHT NOW. JUST LAST MONTH, CANADIAN REGULATORS CHARGED T.D.$9.2 MILLION, A RECORD IN CANADA FOR FAILING TO FILE REPORTS ON 20 TRANSACTIONS THEY SAY T.D. SHOULD HAVE SUSPECTED WERE FACILITATING MONEY LAUNDERING OR TERRORISM. T.D. ALSO SET ASIDE $600 MILLION CANADIAN IN ANTICIPATION OF FINES FROM ANOTHER AMERICAN REGULATOR AND SAID THAT'S AN INITIAL PROVISION, MEANING THERE IS PROBABLY MORE TO COME. SOME ANALYSTS BELIEVE THE TOAL FINES COULD HIT $2 BILLION U.S., WHICH JUST SO WE'RE CLEAR, ISN'T ENOUGH TO SINK A COMPANY THAT MADE $15 BILLION CANADIAN LAST YEAR, BUT IT'S NOT JUST THE FINDS THEY'RE WORRIED ABOUT. >> THE INDIRECT COSTS ARE MORE WORRISOME. THE COSTS OF FIXING THE PROBLEM AND SOMETIMES THAT IS ESTIMATED AS BEING AS MUCH AS THREE TIMES THE COST OF THE PENALTY ITSELF. >> Andrew: LAST YEAR, THEY WERE SET TO BUY AN AMERICAN BANK FOR $13 BILLION U.S. THAT DEAL FELL THROUGH. ACCORDING TO THE WALL STREET JOURNAL, REGULATORS WOULDN'T SIGN OFF ON IT BECAUSE THEY WERE WORRIED ABOUT THE BANK'S HANDLING OF SUSPICIOUS CUSTOMER TRANSACTIONS. >> THIS IS NOT THE FIRST INCIDENT, RIGHT? WE HAVE STANFORD INTERNATIONAL BANK, WHICH OCCURRED A FEW YEARS BACK. T.D. BANK WOULD ACCEPT THE, YOU KNOW, WHAT IS REPUTED TO BE NEARLY $8 BILLION IN PONZI SCHEME FUNDS. ALL THE BANKS AROUND THE WORLD DEAL WITH T.D. ARE GOING TO START TO ASK SOME SERIOUS QUESTIONS ABOUT WHETHER OR NOT INTERACTIONS WITH T.D. WILL TANK THEIR OWN BANKS. >> Andrew: NOW WE REACHED OUT TO T.D. AND THEY SAY THEY ARE COOPERATING WITH ALL OF THESE INVESTIGATIONS, PROVIDING DOCUMENTS AND VIDEO SURVEILLANCE TO AUTHORITIES AND IN THE LAST COUPLE OF YEARS, IT HAS PUT HALF A BILLION DOLLARS INTO THEIR ANTI-MONEY LAUNDERING PROGRAM. THEY'RE HIRING NEW STAFF, ADDING TRAIN AND NEW TECHNOLOGY. THE C.E.O.'S MESSAGE TO EMPLOYEES RIGHT NOW, THIS IS GOING TO GET TOUGHER BEFORE IT GETS BETTER. [♪♪♪]