Bank of America hit with $1.2bn fine for money laundering failings

Key points

• Bank of America was fined $1.2bn for anti-money laundering and sanctions failures, including not reporting over $5bn in suspicious activity.
• The Treasury said $1bn of the unreported activity posed national security and illicit finance risks.
• The fine includes the largest-ever OCC penalty of $750m and an $11.6m OFAC settlement for 475 apparent sanctions violations.

Bank of America has been fined $1.2bn for anti-money laundering failings, the US Treasury said. The banking giant failed to report over $5bn in suspicious activity to the government, of which $1bn posed national security and illicit finance risks.

The Treasury said the bank did not flag transactions possibly involving Chinese money laundering networks or trade-based laundering "with a substantial nexus to the southwest border". The announcement came less than 24 hours before Bank of America was due to announce its quarterly earnings on Wednesday morning.

What the bank said

Bank of America told the BBC its team is "far along with and committed to completing the work required to address the issues raised by our regulators". The bank said its third-quarter results will include a non-tax-deductible charge of $1.2bn, impacting net income by approximately 17 cents per share.

It added that it has already dedicated substantial personnel and resources to its ongoing remediation efforts, and those costs are in the current expense base.

When 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.

— Treasury Secretary Scott Bessent

Penalties and violations

Treasury Secretary Scott Bessent said that when 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 Treasury said the bank overly relied on inquiries from outside parties like law enforcement and other financial institutions instead of its own internal controls, effectively outsourcing a substantial portion of its proactive detection and reporting obligations.

As part of the settlement, Bank of America admitted it "willfully violated" the Bank Secrecy Act by failing to maintain a compliant anti-money laundering programme, conduct required due diligence on foreign correspondent accounts and file suspicious activity reports. The $1.2bn fine included penalties from the Office of the Comptroller of the Currency (OCC) and the Office of Foreign Assets Control (OFAC). The OCC's $750m fine was the biggest it has ever levied. OFAC said its settlement was tied to 475 apparent violations of sanctions programmes including those on Russia and Iran, narcotics, and global terrorism, and that the $11.6m amount reflected the violations were "non-egregious".