Class-action suit alleges Chinese and Chinese-American staff were targeted during money-laundering probe
A group of former Toronto-Dominion Bank (TD) employees in the U.S. has initiated a class-action lawsuit in federal court, alleging that the bank disproportionately targeted and fired staff based on their ethnicity during its response to a major financial crime investigation.
Already under scrutiny over its role in facilitating criminal money laundering in the U.S., TD is now facing accusations that it scapegoated Chinese and Chinese-American employees in an attempt to appear compliant with U.S. federal regulators.
The lawsuit, filed in U.S. District Court in New York, represents an escalation of TD's ongoing troubles related to its failures in anti-money-laundering oversight. The case highlights a troubling disconnect between the bank's stated commitment to compliance and its alleged treatment of employees hired to serve the bank's Chinese customer base.
Decade of money laundering exposed
TD’s money-laundering problems came to light through years of investigation by U.S. federal authorities. In 2024, the bank pleaded guilty to conspiracy to commit money laundering, admitting to a decade-long pattern of processing funds for criminal organizations. The guilty plea resulted in approximately $3.1 billion in penalties and restrictions on the bank's U.S. expansion.
The criminal activity involved networks of money brokers connected to Mexican drug cartels using Chinese intermediaries to launder millions through TD's branches, particularly in New York City. One key figure, Da Ying Sze (known as David), pleaded guilty in 2022 to laundering hundreds of millions of dollars through TD branches over three years, repeatedly depositing large amounts of cash and requesting wire transfers and checks.
As federal investigators closed in on the scheme in 2022, TD faced regulatory pressure to demonstrate compliance commitment. Around that time, according to the lawsuit, the bank began systematically closing accounts held by Chinese and Chinese-American customers without clear explanation and initiated terminations that fell disproportionately on its Chinese and Chinese-American staff.
Former employees claimed they were unfairly targeted
More than 22 employees were fired or faced employment sanctions during this period, and all but one were either Chinese or Chinese-American. According to reporting by The Globe and Mail, the firings accelerated as TD prepared for federal inspections. In their complaint, the former employees alleged that TD had “aggressively and disparately enforced [anti-money laundering] AML policies against its Chinese and Chinese-American employees” who were “unjustly and insincerely linked to the Chinese money brokers.”
They were terminated for what the court filings describe as “unspecified violations” of TD's code of ethics and were subjected to debanking — a process in which the employees and their family members were removed as customers of the bank entirely.
Although TD hired these employees specifically to build relationships with the bank's Chinese customer base, when those relationships came under scrutiny during the investigation, the employees were treated as liabilities rather than assets.
Earlier this year, TD significantly cut the compensation of its top U.S. executives in the wake of the money-laundering scandal, as reported by Wealth Professional Canada.
Claims of ethnic discrimination
The former branch-level employees maintain that their terminations were motivated by ethnicity rather than genuine misconduct and are pursuing a class action on behalf of all Chinese and Chinese-American TD employees investigated and fired since 2022. The lawsuit suggests that, rather than confronting institutional failures in its AML systems, TD created scapegoats among its workforce based on their ethnic background and customer connections.
“None of the 22 terminated employees had piles of cash dumped on their desks. None withdrew cash from ATMs at huge multiples of permissible daily limits. None interacted with international drug traffickers,” the former employees said in court documents, adding that TD didn’t conduct “similar investigations into the flagged transactions of employees who are not Chinese or Chinese American.”
TD has declined to comment on the pending litigation but states that it is committed to remediation efforts, including hiring hundreds of new AML and compliance professionals. Nevertheless, the class-action lawsuit challenges whether those efforts represent genuine institutional reform or cosmetic changes designed to satisfy regulators while avoiding accountability for systemic problems.
The case is expected to proceed through U.S. federal court, and its outcome could have significant implications beyond TD, potentially influencing how other financial institutions balance compliance obligations with the fair treatment of employees during regulatory investigations.
In May 2024, TD was also fined more than C$9 million for violations of Canada’s anti-money-laundering and terrorist financing laws.
