In a landmark enforcement action announced Tuesday by the U.S. Treasury Department, one of America’s largest financial institutions, Bank of America, has been slapped with a $1.2 billion (£910 million) penalty for systemic failures to identify and report potential money laundering and other unlawful financial activities.
Treasury investigators detailed that the banking giant neglected to flag more than $5 billion in suspicious transactions to federal regulators, with $1 billion of that unreported activity carrying clear national security and illicit finance threats. Among the unflagged transactions were transfers linked to suspected Chinese money laundering networks and trade-based money laundering operations with deep connections to the U.S. southwest border, the department confirmed.
In a statement provided to the BBC ahead of the announcement, Bank of America acknowledged the regulatory findings and noted that it has already invested heavily in corrective action. “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 public announcement came just 24 hours before the bank was scheduled to release its third-quarter quarterly earnings Wednesday morning. In a pre-earnings statement, Bank of America confirmed it would take a non-tax-deductible $1.2 billion charge that would cut net income by roughly 17 cents per share, adding that it has already allocated significant personnel and funding to ongoing remediation work, with those costs already reflected in current operating expenses.
Treasury Secretary Scott Bessent emphasized the severity of the violations in announcing the penalty, which ranks as the third-largest enforcement fine the department has ever issued. “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 U.S. financial system to significant illicit finance risks,” Bessent said.
Regulators found that Bank of America systematically abdicated its responsibility by relying almost entirely on external inquiries from law enforcement and other financial firms rather than maintaining its own robust internal anti-money laundering controls. The Treasury Department said this practice resulted in the bank effectively outsourcing core mandatory duties of proactive suspicious activity detection and reporting to outside third parties.
As part of the negotiated settlement, Bank of America explicitly admitted that it willfully violated the Bank Secrecy Act. The admission confirms the bank failed to maintain a compliant anti-money laundering program, conduct legally required due diligence on foreign correspondent accounts, and submit mandatory suspicious activity reports to regulators.
The total $1.2 billion fine combines penalties from two separate federal regulators: the Office of the Comptroller of the Currency (OCC) and the Office of Foreign Assets Control (OFAC). The OCC’s $750 million portion of the penalty marks the largest fine the agency has ever imposed on a banking institution in its history.
OFAC’s $11.6 million share of the penalty stems from 475 documented apparent violations of U.S. sanctions programs, including sanctions targeting Russia, Iran, international narcotics trafficking networks, and global terrorist organizations. OFAC officials noted that the reduced settlement amount reflects their determination that the bank’s violations were non-egregious.