Bank of America Faces $1.21 Billion Fine Over Money Laundering Failures

Bank of America has been hit with a staggering $1.21 billion fine by U.S. regulators for its inability to detect and report billions of dollars in suspicious transactions. This penalty underscores serious lapses in the bank's anti-money laundering compliance, particularly concerning activities linked to potential money laundering and sanctions violations.

The U.S. Treasury Department revealed that Bank of America failed to report more than $5 billion in suspicious activity, including $1 billion that posed significant national security risks. Among the unreported transactions were those that may have involved Chinese money laundering networks and trade-based laundering associated with the U.S. southwest border.

According to the Treasury, the bank prioritized revenue generation over compliance, relying excessively on inquiries from law enforcement and other financial institutions instead of strengthening its internal controls. This approach effectively outsourced a substantial part of its responsibility to proactively detect and report suspicious activity.

As part of the settlement, Bank of America admitted to “willfully violating” the Bank Secrecy Act, failing to maintain a compliant anti-money laundering program, and neglecting to conduct necessary due diligence on foreign correspondent accounts. The fine includes a record $750 million civil penalty imposed by the Office of the Comptroller of the Currency (OCC), which described the bank’s compliance program as “deficient and ineffective.” The OCC noted that Bank of America had not adequately addressed shortcomings identified in a cease-and-desist order issued in 2024, which pointed to delays in reporting billions of dollars in transactions.

Settlement Details and Sanctions Violations

Additionally, the bank agreed to pay $11.6 million to the Office of Foreign Assets Control (OFAC) over 475 apparent violations of sanctions programs targeting countries like Russia and Iran, as well as issues related to narcotics and global terrorism. OFAC determined that these violations were “non-egregious,” reflecting a more lenient stance in the settlement.

The Real Play

Under the terms of the settlement, Bank of America must engage an independent third party to review past transactions, identify any suspicious activity that went undetected, and report these transactions to the Financial Crimes Enforcement Network (FinCEN). The bank has stated that it has invested billions in technology and dedicated thousands of employees to combat financial crime, emphasizing its commitment to fulfilling the requirements set by regulators.

The financial repercussions of this penalty are significant; Bank of America has indicated that its third-quarter results will reflect a non-tax-deductible charge of $1.2 billion, which is expected to reduce its net income by approximately 17 cents per share. This fine comes shortly after American Express faced a similar fate, being fined $350 million for comparable anti-money laundering deficiencies. Following the announcement, Bank of America's shares fell by 2.7% in after-hours trading, adding to a 1.1% decline earlier in the day.