Shares of TD Bank are falling in premarket trading on a report that the Canadian bank is set to pay around $3 billion in penalties and accept limits on its U.S. growth.

Shares of TD Bank (TD) are falling in premarket trading after reports that the Canadian bank is set to pay approximately $3 billion in penalties and face restrictions on its U.S. growth due to its failure to curb money laundering activities connected to drug cartels. According to The Wall Street Journal, the Office of the Comptroller of the Currency will impose the fines and place limits on the expansion of TD’s U.S. retail operations.

Earlier reports indicated that TD’s U.S. unit plans to plead guilty to criminal charges as part of a U.S. Department of Justice (DOJ) investigation into money laundering allegations tied to a Chinese crime syndicate.

TD Bank’s Financial Setbacks and CEO Transition

In anticipation of these penalties, TD Bank had already set aside billions of dollars. Back in August, CEO Bharat Masrani stated that the bank was cooperating with U.S. regulators and law enforcement agencies to resolve the issues related to its anti-money laundering (AML) practices.

TD Bank reported an unexpected third-quarter loss in August due to these financial provisions. The bank also announced that Masrani will step down in April 2025, unveiling a succession plan for the CEO role.

TD Bank’s shares fell by 4.5% in premarket trading on Thursday, following a 1.7% decline earlier in the week. The bank has yet to respond to requests for comment on the situation.