Bank of America fined $1.2 billion over anti-money laundering failures, FT reports

Investing.com -- The U.S. Treasury Department has levied more than $1.2 billion in penalties against Bank of America Corp (NYSE: BAC) over widespread anti-money laundering and sanctions compliance failures, according to reporting from the Financial Times. The sweeping enforcement action concludes that the second-largest American lender systematically failed to flag and report more than $5 billion in suspicious transactions linked to foreign illicit finance networks and border-adjacent criminal enterprise.

The headline penalty includes a $1.2 billion fine from the Treasury’s Financial Crimes Enforcement Network (FinCEN), which incorporates a $750 million civil penalty from the Office of the Comptroller of the Currency (OCC). The OCC assessment represents the largest enforcement penalty in the banking regulator’s history.

Separately, the Treasury’s Office of Foreign Assets Control (OFAC) reached an $11.6 million settlement with Bank of America addressing apparent violations of multiple federal sanctions programs, including those targeting Russia, Iran, global terrorism, and international narcotics trafficking. Federal officials emphasized that the bank’s operational lapses left the broader financial architecture vulnerable to exploitation, given that Bank of America processes hundreds of trillions of dollars in global transactions annually.

The enforcement action lands at a particularly precarious juncture for Bank of America, coming on the eve of its third-quarter earnings release. The sudden regulatory blow weighed on market sentiment, sending the bank's stock down 1.8% in after-hours trading.

According to Treasury disclosures cited by the Financial Times, the unmonitored transfers totaled more than $5 billion, with over 20% tied directly to national security priorities. Regulators specifically highlighted illicit funds routed through suspected Chinese money-laundering operations alongside trade-based money-laundering channels operating across the U.S. southwestern border.

The penalties highlight lingering operational breakdowns despite previous regulatory interventions. The bank was placed under a cease-and-desist order in December 2024 to address compliance deficiencies under the Bank Secrecy Act (BSA), which mandates that financial institutions file Suspicious Activity Reports (SARs) whenever potential criminal activity is identified.

Regulators pulled no punches in assessing executive oversight, accusing Bank of America management of continually minimizing systemic compliance deficiencies rather than aggressively executing remediation plans. OCC head Jonathan Gould categorized the underlying issues as "egregious and continued" violations, noting that key risk management personnel lacked the requisite expertise and training to properly administer the institution's BSA oversight frameworks.

Under the terms of the new consent order, Bank of America must engage an independent third-party monitor to audit historical transactions and identify previously undetected suspicious activity. The action signals a broader crackdown by U.S. authorities on systemic illicit finance risks, coming just days after the OCC levied a $350 million fine against American Express for similar long-standing compliance breakdowns.

Original Article

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