Bank of America faces record $1.21bn fine over AML failures

Bank of America has been ordered to pay more than $1.21 billion in penalties for violations of anti-money laundering and sanctions laws, the US Treasury Department announced on Tuesday. The financial institution admitted to willful breaches of the Bank Secrecy Act, with regulators citing a compliance programme that was both deficient and ineffective. The penalties include a $1.2 billion fine from the Financial Crimes Enforcement Network, which stands as the third largest in the history of the US Treasury, alongside a separate civil monetary penalty of $750 million assessed by the Office of the Comptroller of the Currency. The latter amount represents the largest penalty in the 163-year history of that regulatory body. Additionally, the Office of Foreign Assets Control reached an $11.6 million settlement with the bank regarding sanctions violations connected to Iran, Russia, global terrorism, and narcotics. The Treasury Department credited the penalty imposed by the OCC towards the total fine levied by FinCEN, and no asset cap was imposed on the institution.

Regulators stated that the bank failed to properly monitor trillions of dollars in transactions. The OCC noted that the bank knew for years that it was failing to escalate potentially suspicious activities to investigators for review. Furthermore, the bank’s Bank Secrecy Act officer and staff lacked the sufficient skills and expertise required to effectively manage the compliance programme. FinCEN found that the bank failed to file suspicious activity reports amounting to $5 billion. The institution also failed to conduct due diligence for correspondent accounts held by foreign financial institutions. Treasury Secretary Scott Bessent stated that financial institutions are on the front lines of protecting economic and national security. He added that when a bank of this size fails to meet its obligations, the consequences extend beyond its own walls, exposing the entire US financial system to significant illicit finance risks.

The OCC highlighted that in 2024, Bank of America agreed to a cease-and-desist order related to deficiencies in its compliance programme. However, the lender failed to complete the necessary steps to establish an effective programme after that order. More than a year later, the bank continued to fail to escalate potentially suspicious activity for review. It also processed potential trade-based money laundering transactions due to a flaw in its transaction monitoring system. Comptroller of the Currency Jonathan Gould said that the bank’s poor response to its deficiencies was unacceptable. He noted that the second largest bank’s egregious and continued violations warranted the largest civil money penalty ever assessed by the OCC against a bank. Gould stated that the OCC expects all banks to maintain an effective compliance programme and that those that do not can expect swift and significant action.

A spokesperson for Bank of America said the company has invested billions of dollars in technology and personnel to thwart financial crime. The spokesperson stated that the team is far along with and committed to completing the work required to address the issues raised by regulators. The bank’s third-quarter results, set to be reported on Wednesday, will include a non-tax-deductible charge of $1.2 billion. This charge will impact net income by approximately 17 cents per share.