Bank of America fined $1.2 billion for money laundering compliance failures

Bank of America has been fined $1.2 billion (£910 million) for failing to detect potential money laundering and other illegal activity, according to a statement from the US Treasury Department on Tuesday. The bank reportedly failed to report over $5 billion in suspicious activity to the government, with $1 billion of that posing national security and illicit finance risks. The Treasury noted that these failures included not flagging transactions that may have involved Chinese money laundering networks or trade-based laundering linked to the southwest border. Bank of America stated, "Our team is far along with and committed to completing the work required to address the issues raised by our regulators." This announcement came less than 24 hours before the bank was scheduled to release its quarterly earnings on Wednesday morning. The bank indicated that its third-quarter results would reflect a non-tax-deductible charge of $1.2 billion, impacting net income by approximately 17 cents per share. The bank also mentioned that it has already allocated significant personnel and resources to its ongoing remediation efforts, which are included in the current expense base. In announcing the fine, Treasury Secretary Scott Bessent remarked, "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 US financial system to significant illicit finance risks." The Treasury's report indicated that the bank had overly relied on inquiries from external parties, such as law enforcement and other financial institutions, rather than its own internal controls. This reliance led to the bank "effectively outsourcing to third parties a substantial portion of its proactive detection and reporting obligations," according to the department. As part of the settlement, Bank of America admitted to "willfully violating" the Bank Secrecy Act by failing to maintain a compliant anti-money laundering program, conduct necessary due diligence on foreign correspondent accounts, and file suspicious activity reports. The $1.2 billion fine includes penalties from the Office of the Comptroller of the Currency (OCC) and the Office of Foreign Assets Control (OFAC). The OCC's $750 million fine represents the largest penalty it has ever imposed. OFAC stated that its settlement with the bank was related to 475 apparent violations of sanctions programs, including those concerning Russia and Iran, narcotics, and global terrorism. The settlement amount of $11.6 million was determined based on the assessment that Bank of America's apparent violations were "non-egregious," according to OFAC.