San Francisco: Bank of America has been fined $1.2 billion for failing to identify and report suspicious financial transactions linked to potential money laundering and other illegal activities, according to the US Treasury Department.
The third-largest penalty ever imposed by the department follows the bank’s failure to report more than $5 billion in suspicious activity to the authorities. Of that amount, approximately $1 billion involved risks related to national security and illicit finance, the Treasury stated.
The violations included transactions potentially linked to Chinese money laundering networks and trade-based money laundering activities with significant connections to the US southwest border. According to the Treasury, the bank relied excessively on information requests from external parties, including law enforcement agencies and other financial institutions, instead of using its own internal monitoring systems to identify suspicious transactions.
The department stated that this approach effectively transferred a substantial part of the bank’s responsibility for detecting and reporting suspicious activity to third parties. As part of the settlement, Bank of America admitted that it had willfully violated the Bank Secrecy Act by failing to maintain an effective anti-money laundering programme, conduct the required due diligence on foreign correspondent accounts and submit suspicious activity reports.
US Treasury Secretary Scott Bessent remarked that the failure of a major financial institution to meet its anti-money laundering and sanctions obligations could expose the wider US financial system to significant illicit finance risks.
The $1.2 billion settlement includes penalties imposed by the Office of the Comptroller of the Currency (OCC) and the Office of Foreign Assets Control (OFAC). The OCC imposed a $750 million fine, the largest penalty in the agency’s history.
Separately, OFAC linked its settlement with Bank of America to 475 apparent violations of sanctions programmes covering Russia, Iran, narcotics and global terrorism. The agency emphasised that the $11.6 million settlement reflected its determination that the apparent violations were non-egregious.
Responding to the action, Bank of America reported that it was committed to completing the work required to address the concerns raised by regulators. The bank also pointed that it had already allocated substantial personnel and resources to ongoing remediation efforts.
The announcement came less than 24 hours before the bank was scheduled to release its quarterly earnings. Bank of America added that its third-quarter results would include a non-tax-deductible charge of $1.2 billion, reducing net income by approximately 17 cents per share. The bank added that expenses associated with its ongoing remediation efforts were already reflected in its current expense base.
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