The Treasury Department has revealed a hefty $1.21 billion in penalties against Bank of America due to persistent issues related to anti-money laundering practices and violations of U.S. sanctions.
Regulatory bodies found that the bank did not sufficiently investigate trillions of dollars in potentially suspicious transactions, even after being aware of major compliance shortcomings.
This action marks the largest penalty ever imposed by the Office of the Comptroller of the Currency (OCC) and stands as the third-largest penalty from the Financial Crimes Enforcement Network (FinCEN).
FinCEN’s penalty includes a $1.2 billion charge against the nation’s second-largest bank, which takes into account a $750 million civil penalty previously imposed by the OCC. Additionally, a separate $11.6 million settlement with the Office of Foreign Assets Control (OFAC) brings the total penalties to about $1.21 billion.
Bank of America stated that these penalties will lead to a non-tax-deductible charge of $1.2 billion in its financial results for the third quarter, effectively reducing net income by around 17 cents per share.
A spokesperson for Bank of America acknowledged the violations, emphasizing the company’s investment of billions into technology and its efforts to combat financial crime by employing thousands of workers dedicated to this cause.
The bank expressed that it has collaborated with regulators to address the penalties and claims to have made significant strides in rectifying identified deficiencies.
They also reaffirmed their commitment to complete necessary improvements and to aid both federal and local law enforcement efforts in investigating financial crimes.
Furthermore, the Treasury noted that Bank of America failed to report over $5 billion in suspicious transactions within required time frames. This included more than $1 billion linked to national security risks, such as Chinese money laundering networks and potential fraud tied to activities along the southwest border.
As part of its arrangement with FinCEN, the bank admitted to willful violations of the Bank Secrecy Act. These violations included an inadequate anti-money laundering program, failing to perform due diligence on certain foreign bank accounts, and not filing required suspicious activity reports.
The OCC earlier identified serious deficiencies in 2023 and issued a cease-and-desist order in December 2024 demanding the bank to enhance its anti-money laundering measures.
However, regulators discovered that internal controls at the bank remained problematic, allowing potential trade-based money laundering transactions to go unnoticed.
Comptroller of the Currency Jonathan V. Gould criticized the bank for not rectifying these issues despite ongoing alerts.
The separate OFAC settlement involved 475 apparent violations of U.S. sanctions against various countries, including Iran, Russia, Belarus, Burma, and Somalia, as well as offenses related to narcotics trafficking and global terrorism.
The violations included processing transactions through banks that were sanctioned, allowing transactions by certain sanctioned individuals, and not updating federal sanctions watchlists in a timely manner.
As part of the enforcement actions, Bank of America is required to collaborate with an independent third party to inspect previously undetected suspicious transactions and to undergo further reviews of its anti-money laundering controls.
The bank has also committed to additional measures for compliance with sanctions, which entail employee training, testing, audits, and ongoing cooperation with federal regulators.
