The Morning Risk Report: TD Bank Probe Tied to Laundering of Illicit Fentanyl Profits

Good morning. A Justice Department investigation into TD Bank’s internal controls focuses on how Chinese crime groups and drug traffickers used the Canadian lender to launder money from U.S. fentanyl sales.

The investigation was launched after agents uncovered an operation in New York and New Jersey that laundered hundreds of millions of dollars in proceeds from illicit narcotics through TD and other banks, according to court documents and people familiar with the matter. In that case and at least one other, prosecutors also allege the criminals bribed TD employees.

• Longstanding scrutiny: TD’s anti-money-laundering practices have been under scrutiny for years. The bank said Tuesday that in addition to the Justice probe, it is the subject of three other anti-money-laundering investigations in the U.S. TD set aside $450 million to resolve one of those inquiries and said it expects additional penalties.
   
• Homegrown fine: On Thursday, a Canadian banking regulator fined TD the equivalent of $6.7 million for failing to file suspicious activity reports and document risks related to money-laundering and terrorist activity, among other things.
   
• Under surveillance: The probe stems in part from a criminal case into an operation that laundered at least $653 million in proceeds from illicit narcotics, according to court documents. During one day of surveillance, agents followed members of one organization in a box truck as they stopped at three separate TD branches. Prosecutors alleged that Sze and others provided gift cards and other bribes worth at least $57,000 to employees of the bank.

Former Pioneer CEO is accused of trying to collude with OPEC.

The former CEO of shale oil company Pioneer Natural Resources attempted to collude with OPEC officials to raise oil prices, U.S. antitrust enforcers said in an unusual order that barred the executive from Exxon Mobil’s and could lead to a criminal probe.

Officials at the Federal Trade Commission have decided to refer the allegations against Scott Sheffield to the Justice Department for a potential criminal investigation, according to people familiar with the matter. It is unclear whether the FTC has contacted the department yet.

TikTok’s push for users to lobby Congress should be investigated, lawmakers say.

TikTok should be investigated for its campaign to have users lobby Washington over legislation that could kill the video-sharing app stateside, the bipartisan leaders of a China-focused congressional committee said.

TikTok’s plea to users to contact their representatives, which came amid debate on legislation on the app’s fate, could violate federal law against deceptive business practices and child protection law, the leaders of the House Select Committee on the Chinese Communist Party said Thursday in a letter to Federal Trade Commission head Lina Khan.

• Securities regulators have ended an investigation into large bets that Barry Diller, Alexander von Furstenberg and David Geffen made on Activision Blizzard days before the videogame company agreed to be acquired by Microsoft in 2022.

Geopolitics takes a central role in supply chains.

A quandary is playing out across thousands of companies as growing geopolitical hurdles are complicating supply chains, from expanding Western tariffs and import restrictions on raw materials and products from China and other countries to the Houthi attacks on commercial shipping that have effectively closed off the Suez Canal.

“Supply chain managers today are thinking more about geopolitical risk than they are about any other risk,” said Brian Bourke, chief commercial officer at Seko Logistics, a Schaumburg, Ill.-based freight forwarder.

• Sony Pictures and private-equity firm Apollo Global Management have submitted an all-cash $26 billion offer for Paramount Global, the latest twist in one of the messiest deal dramas in recent memory.
   
• Like many candidates, RFK Jr. engenders strong feelings of support among his staff, but several aides said their colleagues’ commitment was almost cultlike.
   
• Peloton Interactive said that Barry McCarthy is stepping down as chief executive and that the company will reduce its global workforce by 15%, or about 400 employees.
   
• A Defense Department employee acted as his own attorney in pursuing a $3,000 claim against the government.  He wasn’t a fool. Stuart Harrow’s case made it to the Supreme Court.