09:09 AM EDT, 05/07/2024 (MT Newswires) -- Toronto-Dominion Bank ( MLWIQXX ) is under escalating pressure to shake up its leadership in response to emerging details about its anti-money-laundering gaps that prompted a probe from U.S. regulatory and law-enforcement agencies, The Globe and Mail newspaper is reporting Tuesday.

It noted media reports Thursday revealed that the lengthy investigation is tied to a US$653-million money-laundering and drug-trafficking operation, providing a long-awaited look into the issues that derailed TD's major acquisition of Tennessee-based First Horizon Corp. last year.

The uncertainty around the extent of the blow that the investigation would deal to Canada's second-largest lender has caused concern among investors and analysts over TD's growth prospects, the report said. The latest revelations have bolstered those worries and cast further doubt over chief executive officer Bharat Masrani's remaining runway in the top job, it added.

"Repeated control failures call for a refresh of the management team," Jefferies analyst John Aiken said in a note to clients. "While there has been some reshuffling of the deck in the U.S. operations, these failures are likely to call for more dramatic changes at the executive committee level. With departures around the table, TD's bench strength has weakened, and we are concerned it could be facing an analogous succession conundrum as Scotia."

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