Toronto-Dominion Bank's handling of "suspicious" customer transactions was behind regulators' refusal to approve the lender's $13.4 billion deal to buy First Horizon, The Wall Street Journal reported Monday, citing people familiar with the matter.

The reluctance by the Office of the Comptroller of the Currency and the Federal Reserve to give TD a clean bill of health on its anti-money-laundering practices proved to be the biggest obstacle, according to the report.

TD had pledged to regulators that it would make its anti-money-laundering policies more comprehensive and timely, but the assurances were not enough to sway regulators, the WSJ reported.

TD and First Horizon did not immediately respond to Reuters requests for comment.

The banks ended their proposed merger last week, citing a lack of clarity on when they would get regulatory approvals.

At the time, a spokesperson for First Horizon said the termination was solely related to TD and had nothing to do with ongoing banking turmoil.