Bank of America fined USD 1.21 billion over money-laundering failures

Bank of America has been fined more than USD 1.21 billion by US regulators over failures in its anti-money laundering and sanctions compliance programs, including delays in reporting more than USD 5 billion in suspicious transactions.

The Financial Crimes Enforcement Network assessed a USD 1.2 billion penalty, which credits a concurrent USD 750 million penalty imposed by the Office of the Comptroller of the Currency. The Office of Foreign Assets Control separately reached an approximately USD 11.66 million settlement with the bank.

Why was Bank of America fined?

US regulators found widespread weaknesses in Bank of America’s anti-money laundering controls and suspicious-activity reporting. The bank admitted to willfully violating the Bank Secrecy Act, while more than USD 1 billion of the transactions it failed to report on time involved national security-related and other priority illicit-finance risks.

Bank of America admitted as part of the FinCEN resolution that it failed to maintain an adequate anti-money laundering program, conduct required due diligence on foreign correspondent accounts and file suspicious activity reports.

The Treasury Department said problems with the bank’s transaction monitoring and customer due diligence contributed to more than USD 5 billion in suspicious transactions being reported late.

More than USD 1 billion of that activity involved national security-related and other priority illicit-finance risks, including transactions indicative of Chinese money-laundering networks, fraud and potential trade-based money laundering linked to the US southwest border.

Treasury said Bank of America prioritized revenues as the compliance problems developed and minimized the impact on required compliance resources. It also relied too heavily on inquiries from law enforcement and other financial institutions instead of its own controls to detect suspicious activity.

OCC imposes record USD 750 million penalty

The OCC imposed a USD 750 million civil penalty over Bank Secrecy Act violations and deficiencies in Bank of America’s anti-money laundering program, the largest penalty in the regulator’s history.

The regulator described the program as “deficient and ineffective” and said weaknesses in the bank’s transaction-monitoring system led to delays in filing suspicious activity reports covering billions of dollars in transactions.

The deficiencies had previously been identified under a 2024 cease-and-desist order.

FinCEN is also requiring Bank of America to work with a third party to review past transactions and identify suspicious activity that went undetected.

The bank will also undergo independent reviews of its transaction monitoring, customer due diligence, due diligence on foreign correspondent accounts and relevant data governance systems.

Separately, Bank of America agreed to pay approximately USD 11.66 million to OFAC to settle potential civil liability for 475 apparent violations of US sanctions programs.

The violations involved sanctions relating to Russia, Belarus, Iran, Burma, Somalia, narcotics and global terrorism. OFAC classified the apparent violations as non-egregious.

Penalties to hit third-quarter earnings

Bank of America said its third-quarter results, due Wednesday, will include a USD 1.2 billion non-tax-deductible charge, reducing quarterly net income by approximately 17 cents a share.

“Financial crime compliance is serious, and we are responsible for getting it right,” a Bank of America spokesperson said.

The bank said it had invested billions of dollars in technology and dedicated thousands of employees to combating financial crime, adding that it was well advanced in addressing regulators’ concerns.

Analysts surveyed by LSEG had estimated adjusted earnings of USD 1.10 a share, excluding one-off items such as the regulatory charge.

Bank of America shares fell 2.7% in after-hours trading after declining 1.1% during the regular session.

UBS analyst Erika Najarian said the penalties could add to concerns about higher expenses and whether the bank could maintain its roughly USD 6 billion quarterly share buyback pace. She noted that regulators had not imposed an asset cap restricting the bank’s growth.

The enforcement actions come days after American Express was fined USD 350 million over separate deficiencies in its Bank Secrecy Act and anti-money laundering compliance program.