Bank of America fined $1.2 billion over money-laundering violations

The U.S. Treasury Department has imposed a penalty exceeding $1.2 billion on Bank of America Corp for significant anti-money laundering and sanctions compliance breaches, according to the Financial Times. This extensive enforcement action revealed that the second-largest American bank had failed to identify and report more than $5 billion in questionable transactions associated with illicit financial networks and border-related criminal activities.

The headline penalty comprises a $1.2 billion fine from the Treasury’s Financial Crimes Enforcement Network (FinCEN) and a $750 million civil penalty from the Office of the Comptroller of the Currency (OCC), which is the highest enforcement penalty in the bank regulator's history. The Office of Foreign Assets Control (OFAC) also reached an $11.6 million settlement with Bank of America regarding alleged violations of various federal sanctions programs, including those against Russia, Iran, global terrorism, and international narcotics trafficking.

Federal authorities stressed that the bank's operational errors put the entire financial system at risk, given that Bank of America handles hundreds of trillions of dollars in global transactions each year. The enforcement action occurs at a critical time for the bank, preceding its third-quarter earnings announcement, which sent its stock down by 1.8% in after-hours trading.

According to Treasury information shared by the Financial Times, the unmonitored transfers amounted to over $5 billion, with more than 20% of them linked to national security concerns. Regulators pointed out illicit funds moving through suspected Chinese money-laundering networks and trade-based money-laundering channels along the U.S. southwestern border.

The penalties underscore persistent operational shortcomings despite prior regulatory actions. Bank of America was previously placed under a cease-and-desist order in December 2024 to rectify compliance issues under the Bank Secrecy Act (BSA), which requires financial institutions to file Suspicious Activity Reports (SARs) when potential criminal activity is detected.

Regulators were particularly harsh in assessing executive supervision, accusing the bank's management of consistently underplaying systemic compliance failures instead of actively implementing remediation plans. The OCC's head, Jonathan Gould, described the underlying issues as egregious and persistent violations, noting that key risk management staff lacked the necessary expertise and training to effectively manage the bank's BSA oversight systems.

As part of the new consent order, Bank of America must hire an independent third-party monitor to examine historical transactions and uncover any previously unnoticed suspicious activity. This action signals a broader U.S. government initiative to combat systemic illicit finance risks, following closely after the OCC imposed a $350 million fine on American Express for similar ongoing compliance failures.