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

The US Treasury Department has imposed a $1.2 billion fine on Bank of America for its failure to detect potential money laundering and other illegal activities, according to the latest report. The banking giant allegedly failed to report over $5 billion in suspicious transactions to the government, with $1 billion of those activities posing national security and illicit finance risks.

Among the issues highlighted by the Treasury included the failure to flag transactions possibly linked to Chinese money laundering networks or trade-based laundering, particularly near the southwest US border.

Bank of America has acknowledged the issues and stated that they are committed to addressing the problems raised by regulators. The bank mentioned that the fine would impact its net income by approximately 17 cents per share in their upcoming third-quarter results. The bank also revealed that they have allocated significant personnel and resources towards remediation efforts, with these costs already incorporated into the current expense base.

In announcing the fine, the third-largest ever imposed by the Treasury Department, Secretary Scott Bessent emphasized that when a bank of Bank of America's size fails to meet its anti-money laundering and sanctions obligations, it risks compromising the entire US financial system. The Treasury noted that Bank of America overly relied on external inquiries, such as those from law enforcement and other financial institutions, rather than utilizing its own internal controls.

This reliance effectively outsourced a substantial portion of the bank's proactive detection and reporting responsibilities, according to the department.

As part of the settlement, Bank of America admitted to willfully violating the Bank Secrecy Act by not maintaining a compliant anti-money laundering program, conducting required due diligence on foreign correspondent accounts, and filing suspicious activity reports. The Department of Treasury's settlement with Bank of America included penalties from the Office of the Comptroller of the Currency (OCC) and the Office of Foreign Assets Control (OFAC), totaling $1.2 billion.

The OCC's $750 million fine marked the largest penalty ever levied by the office. OFAC attributed their settlement amount of $11.6 million to the determination that Bank of America's apparent violations were non-egregious.