US Hits Bank Of America With $1.2 Billion Fine Over Money Laundering, Sanctions Violations

The US Treasury Department has imposed more than $1.21 billion in penalties on Bank of America for failing to detect and report more than $5 billion in suspicious transactions, including activity linked to national security risks, Chinese money laundering networks and potential illicit finance along the US southwest border.

The penalty against America’s second-largest bank is the third-largest in Treasury Department history. Treasury Secretary Scott Bessent said the bank’s compliance failures exposed the wider US financial system to illicit finance risks, adding that even the largest institutions were not above the law.

The Treasury’s Financial Crimes Enforcement Network (FinCEN) assessed a $1.2 billion penalty, which includes a $750 million civil penalty imposed by the Office of the Comptroller of the Currency (OCC), the largest in the regulator’s history. The OCC penalty will be credited against the FinCEN assessment. Separately, the Office of Foreign Assets Control (OFAC) reached an $11.6 million settlement with the bank over more than 400 apparent sanctions violations involving programmes targeting Iran, Russia, narcotics and global terrorism.

Regulators said the bank’s anti-money laundering controls suffered from persistent weaknesses. It relied excessively on information from law enforcement agencies and other financial institutions rather than identifying suspicious activity through its own monitoring systems. Delayed investigations and reports, inadequate customer due diligence, gaps in staff training and ineffective internal audits further weakened compliance.

The OCC said the bank’s anti-money laundering programme remained deficient despite a December 2024 cease-and-desist order requiring corrective action. The Treasury said Bank of America admitted it had wilfully violated the 1970 Bank Secrecy Act, which requires banks to help authorities detect and prevent money laundering.

The penalty will affect the bank’s third-quarter earnings. Bank of America said it would record a non-tax-deductible charge of approximately $1.2 billion, reducing quarterly net income by around 17 cents per share. Its shares fell 1.1 per cent during Tuesday’s regular session and another 2.7 per cent in after-hours trading.

Under the enforcement order, the bank must appoint an independent third party to review past transactions, identify previously undetected suspicious activity and report findings to FinCEN. Independent reviews will also examine transaction monitoring, customer due diligence, foreign correspondent accounts and data governance.

The action follows a $350 million penalty against American Express National Bank on October 8. Earlier major Treasury settlements included roughly $4 billion with cryptocurrency exchange Binance in 2023 and approximately $3 billion with Canada-based TD Bank in 2024.