TD Bank Faces Scrutiny Over Alleged Bias in Anti-Money-Laundering Remediation Efforts

US regulators are examining claims that TD Bank’s anti-money-laundering remediation disproportionately targeted employees of Chinese descent, raising questions about whether corrective compliance processes evolved into patterns of internal bias. As the bank intensified investigative measures in response to major AML failures, internal reviews reportedly focused most heavily on Chinese and Chinese American staff, particularly those working in branches serving New York City’s Chinatown communities. Public allegations suggest that culturally typical financial habits were misinterpreted as suspicious activity, with routine family support transfers treated as potential indicators of illicit behavior. This dynamic has created a disconnect between the intended goals of AML remediation and the real-world consequences experienced by staff.

The case has prompted industry-wide reflection, highlighting how large-scale AML crackdowns can unintentionally amplify bias when frameworks fail to account for cultural context. The unfolding situation illustrates operational and human risks that arise when remediation is executed as an urgent signal to regulators rather than as a proportionate response to factual risk.

The underlying criminal activity that prompted this scrutiny involved sophisticated networks of money brokers operating between the United States, Mexico, and Chinese intermediaries. These networks specialized in converting drug trafficking proceeds into usable currency for cartel organizations while simultaneously providing value transfer solutions for individuals moving funds quickly across borders without formal banking channels. A central mechanism relied on bulk cash placement through New York City branches, particularly in neighborhoods where cash handling remained common, which made these locations fertile ground for the concealment of illicit proceeds. Cash couriers deposited large sums into accounts controlled by intermediaries, who then initiated rapid outward transfers to obscure the origin of the funds.

One of the most visible figures associated with these schemes, Da Ying Sze, known as David, admitted to coordinating a multimillion-dollar laundering operation through TD Bank branches. Over roughly three years, Sze reportedly deposited substantial amounts of cash through accounts tied to associates and immediately requested wires or cashier’s checks. The objective was to cycle the money through the traditional financial system faster than automated controls could respond. The volume and velocity of these transactions transformed ordinary branches into unwitting conduits for a global laundering network, with placement, layering, and dispersal occurring within compressed timeframes that exploited monitoring delays, inconsistencies in heightened due diligence, and gaps in alert escalation.

Because many of these transactions occurred in locations where culturally influenced cash activity was already common, the laundering activity blended into everyday customer behavior. This overlap between legitimate community practices and illicit exploitation set the stage for tensions during the bank’s internal cleanup. When the laundering networks were exposed, the bank faced intense pressure to demonstrate immediate control improvements, shaping investigations that reportedly focused disproportionately on staff whose heritage coincidentally aligned with intermediaries involved in the criminal schemes.

As internal remediation accelerated, employees of Chinese descent reported heightened scrutiny not applied equally to other staff. Investigations often shifted from branch-level customer interactions to detailed questioning of personal financial behavior. Employees described being summoned to interviews involving multiple compliance and security personnel, with lines of inquiry extending far beyond their work responsibilities. Routine cultural financial practices—such as pooled family contributions, cash gifts exchanged during holidays, or short-term loans within extended family networks—were reportedly interpreted as suspicious transactional behavior. Many dismissed individuals had long, stable service histories with no prior indication of misconduct, and their personal transactions had previously never triggered concern. Yet during the AML overhaul, these same activities were reframed through the lens of heightened enforcement.

The consequences for affected staff were severe. Workers were placed on extended administrative leave, terminated without detailed explanations, and had personal and family accounts closed. This demarcation affected access to financial services and caused reputational harm within closely knit communities. Patterns emerged showing that a disproportionate number of impacted employees worked in Chinatown-area branches, served Chinese-speaking clientele, or shared heritage associated with the laundering networks’ intermediaries. While the majority of staff had no connection to criminal activity, ethnicity appeared correlated with investigative intensity. These observations suggest that, under pressure, investigators may have unconsciously linked employee heritage with perceived risk. Remediation carried out in an environment of heightened scrutiny and limited contextual training can therefore produce demographic clustering even without explicit discriminatory intent.

The intersection of compliance urgency and staff demographics created conditions in which oversight risks drifting into biased patterns. The bank faced regulatory expectations for visible, decisive action, and rapid employee investigations became a means to signal progress. Yet systemic AML failures are rarely solved through targeted personnel action alone, especially when breakdowns occur across technology, governance, and monitoring frameworks. Investigators operating under pressure may rely on simplified heuristics that fail to distinguish legitimate cultural financial norms from suspicious behaviors. Cash-based gifting traditions, family support payments, or community pooling for milestones such as home purchases can all resemble red flags when interpreted narrowly. Without culturally informed context, employees handling cash through family networks are at higher risk of misclassification.

Internal communication dynamics can exacerbate the issue. When compliance teams circulate early findings about risk clusters, an anchoring effect can occur, leading subsequent investigations to mirror earlier patterns. If initial cases involve individuals of a particular heritage, investigators may unconsciously treat similar staff as more likely to warrant review. Morale suffers when staff perceive investigations as unfair or culturally uninformed, eroding trust that is central to effective compliance culture. Over-focusing on personnel in one community can distract from broader institutional reforms required to rebuild effective AML frameworks. Effective remediation requires a balanced approach that addresses structural deficiencies while ensuring that staff evaluations remain fair, consistent, and proportional.

The case offers practical lessons for AML and compliance leaders. First, investigations must be risk-driven, not heritage-driven; demographic characteristics should not correlate with investigative intensity unless supported by objective indicators. Second, cultural competency must expand within investigative teams. Understanding financial behavior in diaspora communities, where informal networks and cash-based support systems are common, is essential for accurate risk assessment. Deviations from mainstream patterns should not automatically be treated as suspicious. Third, audit and risk functions should track demographic patterns in outcomes. If disciplinary actions or account closures cluster in one group, protocols and escalation criteria should be reviewed immediately to prevent structural bias. Fourth, institutions must communicate clearly with employees about investigative processes, expectations, and documentation requirements to prevent perceptions of unfairness. Fifth, structural system improvements must remain the remediation focus; core failures involved monitoring gaps, delayed escalation, and insufficient integration between branch oversight and centralized risk management. Overemphasis on individual staff reviews risks repeating errors. Finally, leadership should foster a culture where fairness concerns can be raised without fear of retaliation, with accessible whistleblowing channels and escalation pathways.

Financial institutions operating in diverse markets must ensure that AML frameworks reflect and respect community diversity. Without such measures, corrective action intended to strengthen controls can inadvertently erode trust, damage morale, and create new risks for the organization.

By fLEXI tEAM