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When Raymond Chun was intercepted as the next CEO of Toronto-Dominion Bank in September there was a genuine surprise on the street. A month later, after TD Bank amazing guilty plea in a case of money laundering brought by the US Department of Justice, the surprise now is the challenge he will face when he takes the reins of TD next spring.

Much of the news and commentary about TD Bank after the DOJ announcement has rightly focused on the money laundering sins of its US retail bank between 2012 and 2023. However, the details of the DOJ resolution with TD Bank and, in particular, the consent order issued by the US Financial Crimes Enforcement Network points to a future that will lead the bank down a road full of regulatory landmines.

The list of corrective initiatives is long. The consent order points to “ineffective supervision, inadequate internal controls, failure to adequately train staff, deficient risk-based customer due diligence and insufficient independent testing.” For a decade, TD has proven unable to adhere to these basic principles of US anti-money laundering compliance. Mr. Chun will need to instill and sustain a culture of compliance and competence that has proven too high in the past.

Failure to do so will, at the very least, trigger more fines and a continued decline in the bank’s presence in the US.

The asset limit imposed by the US Comptroller of the Currency on TD’s US banking operations during TD’s five-year trial period is dynamic. Each year is a test, and if TD fails the test, the OCC can force the bank to reduce its US assets by up to 7%.

US regulators will be watching TD closely. And they face criticism for not catching the TD bank earlier. Karen Petrou, managing partner of Federal Financial Analytics, told American Banker: “Because the bank agencies didn’t understand early on when they could have effectively protested or closed the bank, they ended up being the 10th largest bank in the country that without no doubt, they were afraid to shut down for potential systemic risks.”

And closing TD in the US is not impossible if Mr Chun allows the bank to relapse into money laundering failures. In 1992, Congress passed the Annunzio-Wylie Anti-Money Laundering Act. Conformable OCC guidelinesrequires that “bank regulatory agencies formally consider revoking the status of any depository institution convicted of money laundering” in court.

What TD Bank signed with the DOJ and other US regulatory agencies was an agreement to resolve the allegations against it. Although the bank has admitted wrongdoing, this approach has avoided pleading guilty or being found guilty in court, a process that would trigger hearings in which US officials would decide whether or not to revoke TD’s US bank status and force the sale of all US bank assets.

Some in the US wanted the DOJ to make an example of TD Bank. They will be even more motivated if Mr. Chun does not respond to calls for reform.

This includes influential Democratic Senator Elizabeth Warren, who was recently quoted as saying that “Banks that do not have strong anti-money laundering standards are acting as criminal slush funds” and that “this is not the first time TD Bank has broken the law, and these executives need to be fully prosecuted, regulators and law enforcement must hold TD Bank accountable for its long history of financial crimes.”

Accountability for money laundering is a politicized issue in the US, pitting the justice system against maintaining stability and employment in the financial sector. This explains why US bank regulators have yet to sentence any bank to death by revoking documents for AML violations, and why banks do not plead guilty.

TD is in danger of being the first, given that Fincen has already concluded that, over the past decade, “systematic failures of TD Bank’s AML program have caused real and material harm to the US financial system.” Doing the same thing again would be a failure too far.

In addition to this monumental challenge, Mr. Chun will also have to reassure the markets. Success on this front can be difficult. He must consider the reality that industry-leading TD Bank’s operating efficiency has been partly boosted for years by limiting funding for its US anti-money laundering program while peers spent more. Mr Chun will have no choice but to raise operating costs more than peer banks in the future as TD recovers.

Every other TD bank CEO has taken the helm with an eye toward organic growth — growing at home in Canada — or growing the U.S. banking footprint. Mr. Chun will be the first one whose main task is to prevent TD from shrinking.