Bank of America fined $1.2 billion for AML failures

Bank of America must pay more than $1.21 billion in penalties for violating anti-money laundering and sanctions laws. The Financial Crimes Enforcement Network levied a $1.2 billion fine and the Office of the Comptroller of the Currency assessed a separate $750 million civil monetary penalty, announced by the Treasury Department on Tuesday.

The $1.2 billion FinCEN fine is the third largest in Treasury history. The OCC's $750 million penalty is the largest in its 163-year history. Combined, these actions represent a record enforcement response to compliance failures at the nation's second-largest bank.

Scope of compliance failures

The bank admitted to willful violations of the Bank Secrecy Act. It failed to implement and maintain an adequate anti-money laundering program, resulting in large numbers of late suspicious activity reports involving billions of dollars.

FinCEN found the bank failed to file suspicious activity reports involving $5 billion. More than $1 billion of that suspicious activity involved national security risks. Those risks included Chinese money laundering networks, fraud, and trade-based money laundering connected to the southwest border. Many late reports showed indicators of potential money laundering.

The OCC found the bank's transaction monitoring system failed to properly monitor trillions of dollars in transactions. Bank of America admitted it failed to conduct due diligence for correspondent accounts for foreign financial institutions. The bank knew for years it was failing to refer potentially suspicious transactions for investigation but did not correct the problems.

Regulatory and legal context

The penalties follow a 2024 cease-and-desist order that the bank failed to fully comply with. More than a year after that order, Bank of America didn’t escalate potentially suspicious activity for review. Regulators found the bank continued to experience widespread breakdowns in internal controls after the order. Gaps allowed potential trade-based money laundering transactions to go undetected.

Comptroller of the Currency Jonathan V. Gould criticized the bank for failing to address problems despite repeated warnings. "The bank’s poor response to its BSA deficiencies is unacceptable," Gould said. He stated the bank signed an order with the OCC almost two years ago to fix longstanding BSA deficiencies and that its egregious and continued violations warrant the OCC imposing its largest civil money penalty ever.

The penalties include credit for the OCC's $750 million civil penalty toward FinCEN's $1.2 billion fine. Separately, the Office of Foreign Assets Control announced an $11.6 million settlement with Bank of America over sanctions violations. That settlement involved 475 apparent violations of U.S. sanctions programs targeting Iran, Russia, Belarus, Burma, Somalia, narcotics trafficking, and global terrorism. Violations included processing payments through sanctioned banks, allowing certain sanctioned individuals to conduct transactions, and failing to promptly update federal sanctions watchlists.

Bank response and financial impact

Bank of America’s third-quarter results, set to be reported Wednesday, will include a non-tax-deductible charge of $1.2 billion. A bank spokesperson said the charge will impact net income by approximately 17 cents per share. The spokesperson cited billions of dollars invested in technology and personnel to thwart financial crime.

The spokesperson said financial crime compliance is serious and the bank is responsible for getting it right. Their team is far along with and committed to completing the work required to address regulator-raised issues. No asset cap was imposed as part of the penalties.

Regulator warnings and outlook

OCC and Treasury officials warned that the bank’s continued failures expose the financial system to illicit finance risks. Treasury Secretary Scott Bessent stated that financial institutions are on the front lines of protecting economic and national security. He said a bank of this size failing AML obligations exposes the entire U.S. financial system to significant illicit finance risks.

Jonathan Gould said the OCC expects all banks to have an effective BSA/AML compliance program. Banks without effective programs can expect swift and significant action from the OCC. The OCC stated the bank 'knew for years that it was failing to escalate potentially suspicious activities to investigators for review' and that its BSA officer and staff 'lacked sufficient skills and expertise' to manage the program.

Bank of America must work with an independent third party to review previously undetected suspicious transactions and undergo additional reviews of its anti-money laundering controls.