Bank of America has been hit with more than $1.21 billion in US regulatory penalties over anti-money laundering and sanctions compliance failures. The US Treasury said the bank failed to report more than $5 billion in suspicious transactions in a timely manner, including over $1 billion linked to national security and other priority illicit-finance risks. The enforcement action includes a record $750 million civil penalty from the Office of the Comptroller of the Currency. Bank of America said it was progressing with remedial measures and had committed resources to addressing the identified weaknesses.
Bank of America Fined $1.2bn Over Money Laundering Control Failures
Bank of America failed to report over $5 billion in suspicious activity, including transactions involving potential illicit finance and national security risks, the US Treasury Department said.
The US Treasury Department on Tuesday announced penalties against Bank of America for its failure to identify and report billions of dollars of potentially suspicious financial activity, raising concerns about anti-money laundering controls.
The Treasury said more than $5bn of suspicious activity went unreported, including some $1bn linked to national security and illicit finance risks. The settlement also covered lapses in sanctions compliance and customer due diligence.
The enforcement action, one of the largest penalties the department has imposed, came less than 24 hours before Bank of America was to report its quarterly earnings Wednesday morning.
Bank of America Money Laundering Failures Under Scrutiny
The Treasury Department said the bank failed to flag transactions that may have involved Chinese money laundering networks and trade-based money laundering with significant ties to the southwest U.S. border.
According to the report, Bank of America relied too much on requests for information from outside parties such as law enforcement agencies and other financial institutions, rather than effective internal monitoring systems.
The department said this approach effectively outsourced to third parties much of the bank’s duty to proactively detect and report suspicious transactions.
Under the settlement, Bank of America admitted to having “willfully violated” the Bank Secrecy Act by failing to maintain a compliant anti-money laundering program, conduct required due diligence on foreign correspondent accounts, and file suspicious activity reports.
The Bank Secrecy Act requires financial institutions to keep certain records and file certain reports in an effort to help authorities detect money laundering and other financial crimes.
The Treasury’s cited failures highlighted the need for independent internal controls, especially at large financial institutions that handle a huge volume of domestic and international transactions.
OCC Imposes Record $750m Penalty on the Bank
The $1.2 billion total penalty against Bank of America included fines from the Office of the Comptroller of the Currency (OCC) and the Office of Foreign Assets Control (OFAC), the Treasury Department said.
The OCC levied a $750m penalty, which the agency called the largest fine it had ever imposed. The action demonstrated the seriousness of the compliance weaknesses identified by regulators.
The OFAC settlement involved 475 apparent violations of sanctions programs involving Russia, Iran, narcotics and global terrorism. These violations concerned restrictions imposed under US sanctions regimes.
The agency said it determined the alleged violations were "non-egregious," resulting in a settlement figure of $11.6m, OFAC said in explaining the settlement.
The OCC penalty and the OFAC settlement differ because they represent distinct regulatory enforcement actions that address different aspects of the bank’s compliance obligations.
The fines together underscore how failings in transaction monitoring, reporting and sanctions screening can have serious regulatory consequences for large financial institutions.
Bank of America Responds Ahead of Quarterly Earnings
Bank of America said it was well underway with its remediation efforts and remains committed to addressing the issues regulators have raised.
The bank also said that it would take a non-tax-deductible charge of $1.2bn in the third quarter, which would cut net income by about 17 cents a share.
It said it had already committed significant personnel and resources to the current remediation efforts and that the costs associated with that work were being absorbed within its existing cost base.
The timing of the announcement put the regulatory settlement just before the bank's scheduled earnings release, possibly drawing investor attention to compliance costs alongside its operating performance.
The charge will hit investors directly, but the longer-term impact will depend in part on how well corrective measures work and on the bank's ability to meet regulatory expectations.
Regulatory Oversight and the Next Steps
The $1.2bn fine imposed on Bank of America demonstrates the importance of having robust anti-money laundering programs, effective sanctions screening and independent reporting systems across the US banking sector.
Failures by a bank of this size could present serious illicit finance risks to the wider financial system, not just to the institution itself, U.S. Treasury Secretary Scott Bessent said.
That settlement raises questions again about whether big banks are able to detect suspicious activity without over-reliance on outside probes or referrals.
The case is a reminder to Sprouts News of the costs—financial and regulatory—of compliance failures at systemically important financial institutions.
The bank’s quarterly results will reflect the financial impact of the issues, while its regulatory compliance and remediation progress is likely to face additional scrutiny.
