Bank of America Fined $1.2 Billion for Anti-Money Laundering Failures

Bank of America has been fined $1.2 billion for failing to adequately detect potential money laundering and other illegal activities, the U.S. Treasury Department announced Tuesday. The banking giant failed to report over $5 billion in suspicious activity to the government, with $1 billion of that amount posing national security and illicit finance risks.

According to the Treasury, these failures included not flagging transactions that may have involved Chinese money laundering networks or trade-based laundering with a connection to the U.S. southwest border. The bank "willfully violated" the Bank Secrecy Act by not maintaining a compliant anti-money laundering program, conducting required due diligence on foreign correspondent accounts, and failing to file suspicious activity reports.

Treasury Secretary Scott Bessent stated that when a bank of Bank of America's size fails to meet its anti-money laundering and sanctions obligations, the consequences extend beyond the institution, exposing the entire U.S. financial system to significant illicit finance risks. The Treasury noted that the bank relied too heavily on inquiries from third parties, such as law enforcement and other financial institutions, rather than its own internal controls, effectively outsourcing a substantial portion of its detection and reporting duties.

The $1.2 billion fine incorporates penalties from the Office of the Comptroller of the Currency (OCC) and the Office of Foreign Assets Control (OFAC). The OCC's $750 million penalty is the largest it has ever imposed. OFAC's settlement, totaling $11.6 million, was related to 475 apparent violations of sanctions programs targeting Russia, Iran, narcotics, and global terrorism. OFAC determined these apparent violations to be "non-egregious."

Bank of America stated that it is committed to completing the work required to address the issues raised by regulators. The bank anticipates that its third-quarter financial results will include a non-tax-deductible charge of $1.2 billion, impacting net income by approximately 17 cents per share. The bank has already allocated substantial personnel and resources to ongoing remediation efforts, with those costs already included in its current expense base.