TORONTO, Nov 25 (Reuters) - TD Bank is preparing

to install U.S. government-ordered monitors and has moved to

reassure employees that it had enough resources to comply with

laws prohibiting money laundering, according to two sources

familiar with the situation.

TD became the largest bank in U.S. history to plead guilty

to violating a federal law aimed at preventing money laundering,

and agreed to pay over $3 billion in penalties to resolve the

charges in September.

Regulators said TD ignored red flags from high-risk

customers and created a "convenient" environment for bad actors

to exploit, including facilitating over $400 million in

transactions to launder funds on behalf of people selling

fentanyl and other deadly drugs and employees taking bribes from

criminal gangs.

The lender is in the process of finding a monitor, typically

a third-party consultant or law firm, to observe its operations,

track its progress on risk and controls, and report to

regulators, according to one of the sources, who declined to be

identified discussing compliance matters.

In a town hall with staff this month, U.S. CEO Leo Salom

said the bank had enough capital, liquidity and leadership

dedicated to fixing the AML program and risk controls, the

source added.

TD appointed Michelle Myers as its global chief auditor,

effective Dec. 9, it said on Friday.

Along with the fines, U.S. regulators punished TD with a

rare asset cap that limits the bank's growth. The Office of the

Comptroller of the Currency also required TD to undergo

independent monitoring for four years and prevented the bank

from opening a new branch or entering a new market without

approval.

Salom told staff that the bank's main priority was enhancing

its AML program and meeting its obligations, the first source

said.

TD has spent $500 million to tighten its AML program and

risk controls this year. It also hired several key executives,

including the head of global AML Herbert Mazariegos from Bank of

Montreal ( BERZ ) and Chief Compliance Officer Erin Morrow from Citigroup ( C/PN )

.

TD has focused on training programs, including using

real-life examples and simulations, to help staff identify red

flags.