Bank of America has been hit with more than $1.21 billion in penalties by US authorities over serious failures in its anti-money laundering controls and compliance with sanctions laws. The action, announced on October 13, follows findings that the lender failed to report more than $5 billion in suspicious transactions, including activity that raised national security concerns.
The penalties rank among the largest ever imposed by the US Treasury Department and mark a record fine for the Office of the Comptroller of the Currency (OCC), the federal agency that supervises national banks. Regulators said the bank’s systems were inadequate to identify, investigate and report potentially illegal financial activity in a timely manner.
The case has put renewed focus on the responsibility of major financial institutions to prevent money laundering, detect suspicious payments and enforce restrictions on transactions linked to sanctioned countries and other illicit activities.
Billions in suspicious transactions went unreported
According to the US Treasury Department, Bank of America failed to report more than $5 billion in suspicious transactions to the Financial Crimes Enforcement Network (FinCEN), the agency responsible for analysing financial intelligence and combating money laundering.
More than $1 billion of the activity involved national security concerns and other priority risks. These included transactions potentially connected to Chinese money laundering networks, fraud and possible trade-based money laundering linked to the US southwest border.
Trade-based money laundering involves disguising the proceeds of crime through international trade transactions, often by manipulating invoices, prices or the movement of goods. Such activity can be difficult to detect when financial institutions lack effective monitoring systems and adequate customer checks.
Regulators said Bank of America allowed suspicious transactions to remain uninvestigated for extended periods. In some cases, reports were filed so late that their usefulness to law enforcement was limited.
The findings also raised questions about the bank’s reliance on information from external parties, including law enforcement agencies and other financial institutions, instead of identifying potential risks through its own monitoring systems.
The Treasury said the bank had failed to take meaningful corrective action despite earlier warnings about weaknesses in its compliance programme.
Breakdown in internal controls
The OCC imposed a $750 million civil money penalty over what it described as a deficient and ineffective anti-money laundering compliance programme. It is the largest penalty in the agency’s history.
The regulator found that weaknesses in transaction monitoring affected the bank’s ability to review potentially suspicious activity across the vast volume of payments it processed. It also identified shortcomings in staff training, internal audits and the escalation of concerns to investigators.
Some employees responsible for anti-money laundering compliance lacked the necessary skills and expertise to manage the programme effectively, according to the regulator. The bank’s internal audit function also failed to identify long-standing weaknesses that were later uncovered by examiners.
The latest action comes despite an earlier regulatory order issued in December 2024 that required Bank of America to address deficiencies in its Bank Secrecy Act compliance programme. Regulators said significant problems persisted more than a year after that order.
The Bank Secrecy Act, enacted in 1970, requires financial institutions to maintain appropriate controls and help authorities detect and prevent money laundering and other financial crimes. Banks must investigate red flags and file suspicious activity reports when transactions meet the relevant reporting requirements.
Sanctions violations add to the penalty
The US Treasury’s Office of Foreign Assets Control (OFAC) also reached an $11.6 million settlement with Bank of America over 475 apparent violations of sanctions programmes.
The cases involved restrictions relating to countries including Russia and Iran, as well as transactions associated with narcotics and global terrorism. The settlement addresses the apparent sanctions violations separately from the main anti-money laundering enforcement action.
US sanctions are designed to restrict financial dealings with designated countries, individuals, organisations and activities. Banks are expected to maintain screening systems and update their controls as restrictions change.
The overall enforcement action exceeds $1.21 billion. The Treasury’s FinCEN penalty is structured to account for the OCC’s $750 million penalty, so the two figures should not be added together as separate full penalties.
Bank promises further corrective action
Bank of America said it was committed to completing the work required by regulators and had already dedicated personnel and resources to addressing the issues. The bank also said the costs of its ongoing remediation efforts were reflected in its existing expenses.
The lender is required to work with an independent third party to review past transactions and identify suspicious activity that may have gone undetected. It must also undergo independent assessments of its transaction monitoring, customer due diligence, foreign correspondent account checks and data governance systems used in its anti-money laundering programme.
The review is intended to help identify missed cases and ensure that relevant suspicious transactions are reported to authorities.
The financial impact will also be significant. Bank of America said its third-quarter results would include a non-tax-deductible charge of about $1.2 billion, reducing net income by approximately 17 cents per share.
The penalty comes as regulators continue to tighten scrutiny of financial institutions’ role in combating illicit finance. The case sends a strong message that even the largest banks must maintain effective compliance systems and respond promptly when warning signs emerge.