Bank of America has been ordered to pay a $1.2 billion civil fine after U.S. regulators determined the bank failed to detect and report a range of suspicious financial activity. The penalty, announced by the Treasury Department, is the third‑largest ever levied for anti‑money‑laundering (AML) violations.
What the fine covers
The Treasury said the bank did not file suspicious activity reports (SARs) for over $5 billion in transactions, including roughly $1 billion that posed national‑security and illicit‑finance risks. Specific shortcomings cited were:
- Failure to flag transactions that may have involved Chinese money‑laundering networks.
- Neglecting trade‑based laundering activities linked to the U.S. southwest border.
- Over‑reliance on external inquiries rather than internal controls, effectively outsourcing detection duties.
Key findings from the Treasury
In a statement, Treasury Secretary Scott Bessent warned that 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 US financial system to significant illicit finance risks.” The department concluded that Bank of America “willfully violated” the Bank Secrecy Act by:
- Not maintaining a compliant AML program.
- Failing to conduct required due diligence on foreign correspondent accounts.
- Neglecting to file SARs as mandated.
Impact on earnings
The bank disclosed that the $1.2 billion charge will be reflected in its third‑quarter results as a non‑tax‑deductible expense, reducing net income by about 17 cents per share. Bank of America said it has already allocated “substantial personnel and resources” to remediation, and that these costs are included in its current expense base.
Regulatory context
The fine includes penalties from two separate agencies:
- The Office of the Comptroller of the Currency (OCC) – part of the $1.2 billion total.
- The Office of Foreign Assets Control (OFAC) – which cited 475 apparent violations of sanctions programs covering Russia, Iran, narcotics and global terrorism. OFAC’s portion of the settlement amounted to $11.6 million, deemed “non‑egregious” by the agency.
These enforcement actions underscore a broader push by U.S. regulators to tighten AML and sanctions compliance across the banking sector, especially after high‑profile lapses at other large institutions.
Looking ahead
Bank of America has pledged to complete the remediation work required by regulators and to strengthen its internal controls. The timing of the announcement—less than 24 hours before the bank’s earnings release—means investors will closely watch how the penalty and associated remediation costs affect the institution’s financial performance in the coming quarters.