US regulators penalized Bank of America over $1.2 billion after finding widespread failures to detect and report illicit transactions.
US regulators have penalized Bank of America more than $1.2 billion for failing to detect money laundering and other illegal transactions, the Treasury Department said on Tuesday. The Guardian reported the penalty is $1.21 billion and represents the third-largest fine in Treasury history, while BBC News reported the penalty as $1.2 billion, or about 910 million pounds.
Federal officials said the lender failed to report more than $5 billion in suspicious activity to the government. That total included $1 billion that posed national security and high-priority illicit finance risks. Unflagged transactions included potential links to Chinese money laundering networks as well as trade-based laundering with a substantial connection to the southwest border.
Treasury officials stated that the bank prioritized revenues when setting up compliance programs and leaned on outside parties, including law enforcement and other financial institutions, instead of internal controls. According to the department, this practice meant the bank effectively outsourced a large part of its proactive detection and reporting duties. As part of the settlement, Bank of America admitted to willfully violating the Bank Secrecy Act by failing to maintain a compliant anti-money laundering program, failing to conduct required due diligence on foreign correspondent accounts, and failing to file suspicious activity reports.
How the penalties break down
The total sanction combines enforcement actions from multiple federal agencies. The Office of the Comptroller of the Currency levied a $750 million civil penalty, marking the largest penalty in that regulator’s history. The watchdog stated that the bank’s compliance program was deficient and ineffective, and that flaws in its transaction monitoring system delayed suspicious activity reports on billions of dollars in payments. The regulator also cited failures to fix anti-money laundering problems that were identified in a 2024 cease-and-desist order.
In addition, the bank reached an $11.6 million settlement with the Office of Foreign Assets Control over sanctions violations. The Guardian noted the settlement involved over 400 apparent violations, while BBC News put the figure at 475 apparent violations across programs covering Russia, Iran, narcotics, and global terrorism. The Treasury said the bank mistakenly processed millions of dollars in prohibited payments, though the violations were classified as non-egregious.
Financial fallout and market reaction
The announcement came less than 24 hours before Bank of America was scheduled to release its third-quarter financial results on Wednesday morning. The bank said its earnings would include a non-tax-deductible charge of $1.2 billion, reducing quarterly net income by about 17 cents per share. Mean analyst estimates compiled by LSEG had projected adjusted earnings per share of $1.10, which excludes one-off items.
Bank of America shares dropped 2.7% in after-hours trading after finishing the regular day down 1.1%. UBS analyst Erika Najarian stated that the penalty could hurt investor sentiment, raise expenses, and create doubt about whether the bank can continue its quarterly share buyback pace of roughly $6 billion. Najarian also noted that regulators did not place an asset cap on the lender to restrict its growth.
In response to the action, a Bank of America spokesperson said, “Financial crime compliance is serious, and we are responsible for getting it right.” The bank stated that it has spent billions of dollars on technology, assigned thousands of staff to fight financial crime, and dedicated resources to ongoing remediation.
Independent review and next steps
The consent order requires Bank of America to hire an independent third party to examine past transactions. The reviewer must track down suspicious activity that the bank missed earlier and report those transactions to the Financial Crimes Enforcement Network, known as FinCen.
The action follows another recent anti-money laundering enforcement case. Regulators fined American Express $350 million days earlier for similar shortcomings in its compliance systems.
