TD Was Convenient for Criminals
Also private equity plumbing, public-market OpenAI, VistaJet and ultra-high-net-worth breakpoints.
One job of a bank is to stop crime. If someone is selling illegal drugs or doing terrorism or being Jeffrey Epstein, he will want a bank account to send and receive money; this is called “money laundering.”1 The US government expects banks to check for criminals, stop them from opening accounts and sending or receiving money, and report their crimes to the government. If a bank does not do this, it will get in trouble. The trouble will consist of (1) a large fine, (2) a guilty plea to federal crimes and (3) Justice Department officials giving a press conference in which they say “Bank X became involved in terrorism and drug trafficking.” These consequences seem bad.
On the other hand, it is impossible for any bank to do this perfectly. Banks do not know exactly the source of funds for every $40 ATM deposit; they don’t know exactly what their customers get up to when they’re not at the bank. A law like “don’t sell cocaine” is relatively straightforward to enforce: If you sell cocaine, you are guilty; if not, not. A law like “don’t provide banking services to cocaine dealers” is harder: If you are a big bank with millions of customers, and you do your best to check to make sure none of them are cocaine dealers, but one customer works a legitimate job but also sells a little cocaine on the side, are you guilty of a crime?