Bank of America has been fined $1.2bn for failing to detect and report potential money laundering and other illegal financial activity, the US Treasury Department announced on Tuesday.
The department said the bank failed to report more than $5bn in suspicious transactions to the government, including $1bn linked to national security and illicit finance risks.
The failures included transactions that may have involved Chinese money laundering networks and trade-based money laundering connected to the US southwest border, according to the Treasury.
Bank of America said it was working to address 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 announcement came less than 24 hours before the bank was due to release its quarterly earnings on Wednesday.
Bank of America said the fine would be recorded as a non-tax-deductible charge in its third-quarter results, reducing net income by about 17 cents per share. “We have already dedicated substantial personnel and resources to our ongoing remediation efforts, and those costs are in the current expense base.”
US Treasury Secretary Scott Bessent said the penalty reflected the risks created when a major financial institution fails to meet its anti-money laundering and sanctions obligations.
“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 Bank of America relied too heavily on information from external parties, including law enforcement agencies and other financial institutions, instead of using its own internal controls to identify suspicious activity.
The department said the bank had “effectively outsourced to third parties a substantial portion of its proactive detection and reporting obligations.”
Under the settlement, Bank of America admitted that it willfully violated the Bank Secrecy Act by failing to maintain a compliant anti-money laundering programme, carry out required due diligence on foreign correspondent accounts and file suspicious activity reports.
The $1.2bn penalty included sanctions imposed by the Office of the Comptroller of the Currency (OCC) and the Office of Foreign Assets Control (OFAC).
The OCC imposed a $750m fine, the largest penalty in the agency’s history.
OFAC said its settlement with the bank related to 475 apparent violations of US sanctions programmes covering Russia, Iran, narcotics and global terrorism.
The agency said the $11.6m settlement reflected its determination that the apparent violations were “non-egregious.”
The overall $1.2bn penalty ranks among the largest ever imposed by the US Treasury Department, adding pressure on Bank of America to strengthen its financial crime controls as it reports its quarterly earnings.
Erizia Rubyjeana
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