Bank of America has been fined $1.2 billion for failing to detect and report suspicious transactions linked to potential money laundering and other illegal activities, the United States Treasury Department has announced.
The department said on Tuesday that the banking giant failed to report more than $5 billion in suspicious activity to the government, including transactions worth $1 billion that posed national security and illicit finance risks.
According to the Treasury, the failures included not flagging transactions that may have involved Chinese money laundering networks and trade-based money laundering linked to the southwestern US border.
Responding to the penalty, Bank of America told the BBC that it was committed to resolving the issues raised by regulators.
“Our team is far along with and committed to completing the work required to address the issues raised by our regulators,” the bank said.
The announcement came less than 24 hours before the bank was scheduled to release its third-quarter earnings on Wednesday.
In an emailed statement, the bank said the results would include a non-tax-deductible charge of $1.2 billion, reducing net income by approximately 17 cents per share.
It added that it had already committed substantial personnel and resources to addressing the compliance issues, with the associated costs reflected in its current expenses.
The Treasury described the penalty as the third-largest ever imposed by the department.
Treasury Secretary Scott Bessent said the bank’s failures had consequences beyond the institution itself.
“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,” Bessent said.
The department said Bank of America relied excessively on information from external parties, including law enforcement agencies and other financial institutions, instead of maintaining effective internal controls.
It said the bank had “effectively outsourced to third parties a substantial portion of its proactive detection and reporting obligations”.
As part of the settlement, Bank of America admitted that it had “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, according to the Treasury.
The $1.2 billion settlement includes penalties imposed by the Office of the Comptroller of the Currency (OCC) and the Office of Foreign Assets Control (OFAC).
The OCC imposed a $750 million fine, the largest penalty in the agency’s history.
Meanwhile, OFAC said its settlement related to 475 apparent violations of sanctions programmes covering Russia, Iran, narcotics and global terrorism.
The agency said the $11.6 million settlement reflected its determination that the apparent violations were “non-egregious”.
Bank of America is one of the largest financial institutions in the United States, and the penalty highlights the regulatory consequences banks can face for failing to meet anti-money laundering and sanctions compliance requirements.
