The Treasury Department on Tuesday announced more than $1.21 billion in penalties against Bank of America, the second-largest bank in the United States, citing violations of anti-money laundering and sanctions laws. The bank admitted that it willfully violated the Bank Secrecy Act, the 1970 law that requires banks to help the government detect and prevent money laundering.
Treasury said the bank failed to report more than $5 billion in suspicious transactions on time. More than $1 billion of that activity carried what the department called national security and other priority illicit finance risks, including transactions indicative of Chinese money laundering networks, fraud and potential trade-based money laundering with a substantial connection to the southwest border.
The department's Financial Crimes Enforcement Network, known as FinCEN, assessed a $1.2 billion penalty that Treasury ranked as the third-largest in its history. The two larger ones, the Associated Press reported, were settlements with the cryptocurrency exchange Binance in 2023 and Canada-based TD Bank in 2024, both during the Biden administration. The Office of the Comptroller of the Currency, an independent bureau within the department, imposed a $750 million civil money penalty, the largest in the agency's history. That amount is credited toward FinCEN's fine rather than added to it. A third Treasury office, the Office of Foreign Assets Control, settled with the bank for $11.6 million over 475 apparent violations of sanctions programs.
"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," Treasury Secretary Scott Bessent said in a statement. "Today's actions send a clear message that even the biggest financial institutions are not above the law."
According to Treasury's findings, as problems with its suspicious transaction reporting and customer due diligence emerged, Bank of America "prioritized its revenues and minimized the impact on its required compliance resources." The bank leaned so heavily on law enforcement inquiries and requests from other financial institutions, rather than on its own internal controls, that it "effectively outsourced to third parties a substantial portion of its proactive detection and reporting obligations," the department said. Suspicious activity sat uninvestigated for extended periods, which led to late reports "of limited utility to law enforcement," and the bank did not take meaningful action even after testing highlighted significant problems.
Treasury also faulted the bank's vetting of customers who relied heavily on payments from unknown third parties. The bank did not act promptly or meaningfully on mounting warning signs about those customers, including potential ties to narcotics trafficking proceeds, even after its own compliance staff escalated concerns about possible trade-based money laundering and fraud.
The comptroller's office found the bank's anti-money laundering program "deficient and ineffective." Its transaction monitoring system failed to properly monitor trillions of dollars in transactions, the regulator said, which led the bank to file large numbers of late suspicious activity reports involving billions of dollars, many of them bearing signs of money laundering. Bank of America signed a cease-and-desist order in December 2024 that required it to fix the program, but more than a year later it still was not escalating potentially suspicious activity to investigators, according to the OCC.
Comptroller of the Currency Jonathan V. Gould noted that the bank processes hundreds of trillions of dollars in transactions every year and said its compliance program "continues to reflect widespread breakdowns in internal controls, which threatens U.S. national and economic security." In the OCC's announcement, he called the bank's response to its deficiencies "unacceptable" and said banks without an effective program "can expect swift and significant action from the OCC."
Treasury traced the sanctions problems to a combination of technical and human errors and poorly calibrated alerts. Bank of America sent correspondent payments through blocked banks, let designated individuals make payments and withdraw funds, was slow to update its watchlists after new designations and mishandled business accounts tied to blocked persons. In all, it processed millions of dollars in payments in apparent violation of programs aimed at Russia, Belarus, Iran, Burma, Somalia, narcotics trafficking and global terrorism. OFAC deemed the apparent violations non-egregious and found that most were not voluntarily disclosed, and it gave the bank no reduction from the base penalty for remedial steps or cooperation.
FinCEN's consent order requires Bank of America to work with a third party on a lookback to identify and report suspicious transactions that went undetected. The bank must also submit to independent reviews of its suspicious activity monitoring, customer due diligence and foreign correspondent account programs, which Treasury said will test how well it handles priority risks involving the southwest border, cartels and potential narcotics trafficking, Iran and Russia.
"Financial crime compliance is serious, and we are responsible for getting it right," Bank of America spokesperson Christa Robinson said in a statement to CNBC. The bank's statement, as reported by the Associated Press, said the penalty resolutions stem from violations cited in the OCC's 2024 order and from FinCEN's investigation. It said the bank has invested billions of dollars in technology, has dedicated thousands of employees to fighting financial crime and is far along with the work its regulators have required.
The bank said the penalties will produce a $1.2 billion charge in its third-quarter results that is not tax deductible and will reduce net income by about 17 cents a share, and that remediation costs are already reflected in its expenses. Bank of America reports those results Wednesday morning. Its shares fell about 2% in after-hours trading Tuesday, CNBC reported.