The US Treasury Department imposed $1.2 billion in fines on Bank of America on Tuesday for severe anti-money laundering and sanctions violations. The penalty marks the third-largest in the agency’s history, stemming from systemic failures to flag billions in suspicious transactions involving Chinese networks and southwest border illicit finance.
Bank of America has been hit with a massive financial penalty totaling $1.2 billion after federal regulators uncovered widespread systemic breakdowns in how the banking giant monitors illicit funds. Treasury Secretary Scott Bessent announced the penalties, which represent the third-largest enforcement action ever taken by the Treasury Department.
Treasury Penalties Target Unreported Suspicious Activity and Border Finance Risks
The enforcement actions stem from allegations that the nation’s second-largest bank failed to mitigate and report priority national security risks. According to federal findings, the institution neglected to report over $5 billion in suspicious activity to the government. At least $1 billion of those unreported transactions directly posed national security and illicit finance risks.
Investigators discovered that the banking giant overlooked transactions linked to Chinese money laundering networks and trade-based laundering with a substantial nexus to the southwest border. The Financial Crimes Enforcement Network assessed the $1.2 billion penalty following investigations that revealed the bank overly relied on external law enforcement inquiries instead of maintaining proactive internal controls.
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, via BBC
Admitted Violations of the Bank Secrecy Act and Regulatory Penalties
As part of the settlement agreement, Bank of America admitted that it willfully violated the 1970 Bank Secrecy Act. The federal statute requires financial institutions to actively help the government detect and prevent money laundering schemes.
The Treasury noted that the bank failed to maintain a compliant anti-money laundering program, neglected required due diligence on foreign correspondent accounts, and failed to file mandatory suspicious activity reports.
- Office of the Comptroller of the Currency (OCC): Assessed a $750 million fine, marking the largest penalty ever levied by the regulatory agency.
- Office of Foreign Assets Control (OFAC): Reached an $11.6 million settlement tied to 475 apparent violations of international sanctions.
OFAC officials noted that the $11.6 million settlement figure reflected the determination that the bank’s apparent violations of programs targeting Iran, Russia, narcotics, and global terrorism were non-egregious.
Bank of America Response and Financial Impact Ahead of Quarterly Earnings
The regulatory announcement arrived less than 24 hours before Bank of America was scheduled to report its quarterly earnings.
Our third-quarter results will include a non-tax-deductible charge of $1.2 billion impacting net income by approximately 17 cents per share.
Bank of America, via BBC
Bank executives emphasized that remediation efforts are already underway and that related costs are accounted for in their current expense base. CEO Brian Moynihan’s institution stated that it has invested billions of dollars in technology and dedicated thousands of employees toward combating financial crime.
Our team is far along with and committed to completing the work required to address the issues raised by our regulators.
Bank of America, via BBC
Historical Context Among Major Federal Enforcement Actions
The $1.2 billion penalty stands as the third-largest enforcement action issued by the Treasury Department. It follows a pair of historic penalties levied during previous regulatory crackdowns on financial compliance failures.
The Treasury’s actions trail a roughly $4 billion settlement issued in 2023 with Binance, the world’s largest cryptocurrency exchange. That case was followed the next year by an approximately $3 billion settlement with Canada-based TD Bank.
