Bank of America fined $1.2 billion for anti-money laundering violations

The U.S. Treasury Department announced Tuesday that it is imposing $1.2 billion in fines on Bank of America for allegedly violating anti-money laundering and sanctions laws. The penalty marks the third-largest fine in the department's history.

Regulatory Penalties and Admissions

The Financial Crimes Enforcement Network (FinCEN) assessed the $1.2 billion penalty for the bank's "failure to mitigate and report priority national security risks, including Chinese Money Laundering Networks and illicit finance along the southwest border." According to Treasury, Bank of America "admits that it willfully violated" the 1970 Bank Secrecy Act.

The total penalty includes a $750 million civil money penalty from the Office of the Comptroller of the Currency (OCC), which is the largest fine ever imposed by that federal bank regulatory agency. This amount is credited against the FinCEN assessment rather than added to it. Separately, the bank reached an $11.6 million settlement with the Treasury’s Office of Foreign Assets Control (OFAC) over "apparent violations of numerous sanctions programs, including on Iran, Russia, narcotics, and global terrorism."

Treasury Secretary Scott Bessent stated, "When a bank of this size fails to meet its anti-money laundering and sanctions obligations, the consequences extend far beyond its own walls, exposing the entire U.S. financial system to significant illicit finance risks."

Specific Compliance Failures

Regulators found that Bank of America failed to properly monitor trillions of dollars in transactions and did not report more than $5 billion in suspicious activity. Of this unreported activity, over $1 billion involved national security-related and other priority illicit finance risks.

According to the OCC, the bank’s compliance program was "deficient and ineffective," and its transaction monitoring system caused delays in filing suspicious activity reports. The OCC noted that the bank failed to fix deficiencies identified in a 2024 cease-and-desist order. Comptroller of the Currency Jonathan Gould said, "The bank’s poor response to its BSA deficiencies is unacceptable."

Treasury stated that the bank "prioritized its revenues" while minimizing compliance resources. The agency noted that Bank of America relied heavily on inquiries from law enforcement and other financial institutions, effectively outsourcing part of its responsibility for detecting suspicious activity.

Financial Impact and Remediation

Bank of America stated that the penalties will result in a "non-tax-deductible charge of $1.2 billion impacting net income by approximately 17 cents per share" in its third-quarter results. The bank reported $6.9 billion in profit for the third quarter, down roughly 17% from a year ago, with earnings per share of $0.91. Without the charge, earnings per share would have been $1.08, missing analyst forecasts of $1.10.

In a statement, Bank of America said, "Financial crime compliance is serious, and we are responsible for getting it right." The bank added that it has "invested billions of dollars in technology and dedicated thousands of employees to combat financial crime."

As part of the settlement, the bank is required to hire an independent third party to review past transactions and identify suspicious activity that was previously undetected. The consent order also mandates independent reviews of its transaction monitoring and customer due diligence programs.

Why it matters

This penalty highlights the continued regulatory scrutiny of major financial institutions regarding anti-money laundering compliance. It follows recent actions against other large entities, including a $350 million penalty against American Express for similar shortcomings. The fine underscores the Treasury Department's stance that even the largest banks must maintain robust internal controls to prevent illicit finance, with regulators emphasizing that failures in these systems pose risks to national security and the broader financial system.

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Sources

• pbs.org: U.S. hits Bank of America with $1.2 billion fine, saying it violated money laundering and sanctions laws | PBS News
• finance.yahoo.com: Bank of America hit with $1.2 billion penalty over money laundering failures
• theguardian.com: Bank of America fined $1.2bn for money-laundering failures | Bank of America | The Guardian
• cnbc.com: Bank of America fined $1.2 billion over money laundering violations
• cnn.com: Bank of America fined $1.2 billion by Treasury Department for violating money laundering and sanctions laws | CNN Business
• nbcnews.com: Bank of America to pay $1.21 billion over sanctions violations

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.