Bank of America hit with $1.2 billion penalty over money laundering failures

Regulators fined Bank of America (BAC) more than $1.2 billion on Tuesday over widespread failures in the banking giant's safeguards against money laundering and other illicit financial activity.

The Treasury Department said the nation's second-largest bank failed to properly monitor trillions of dollars in transactions and to report more than $5 billion in suspicious activity, including transactions potentially tied to Chinese money-laundering networks, narcotics trafficking, and fraud.

The enforcement actions include a $1.2 billion penalty from the Financial Crimes Enforcement Network (FinCEN), the third-largest fine in the Treasury Department's history after it fined crypto exchange Binance $3.4 billion in 2023 and TD Bank for $1.3 billion in 2024. The fine also includes a $750 million penalty from the Office of the Comptroller of the Currency (OCC), the largest ever imposed by that regulator.

The OCC penalty will be credited against FinCEN's assessment rather than added to it. Separately, a $11.6 million sanctions settlement brings the total penalties to more than $1.21 billion.

"Even the biggest financial institutions are not above the law," Treasury Secretary Scott Bessent said in a statement.

Bank of America's stock fell more than 2% after markets closed on Tuesday. It reports third quarter earnings Wednesday morning.

The bank said it will include a "non-tax-deductible charge of $1.2 billion impacting net income by approximately 17 cents per share" in its third quarter results.

"Financial crime compliance is serious, and we are responsible for getting it right," a Bank of America spokesperson said in an email statement, adding that the Charlotte, North Carolina based lender has invested “billions of dollars in technology” and dedicated “thousands of employees to combat financial crime” to resolve the deficiencies.

Regulators said Bank of America's failures extended across its transaction monitoring systems, customer due diligence, and internal oversight.

The bank failed to report more than $5 billion in suspicious transactions, including over $1 billion involving national security-related and other priority illicit finance risks.

FinCEN said Bank of America admitted to willfully violating the Bank Secrecy Act and had effectively outsourced substantial portions of its suspicious activity detection responsibilities to law enforcement and other financial institutions.

The bank also prioritized revenue over compliance resources, according to Treasury, allowing suspicious transactions to go uninvestigated for extended periods.

The penalties come nearly two years after Bank of America agreed to a December 2024 cease-and-desist order requiring it to address longstanding weaknesses in its anti-money laundering controls.

The OCC said the bank failed to make sufficient progress despite that earlier enforcement action.

"Bank of America's poor response to its [Bank Secrecy Act] deficiencies is unacceptable," Comptroller of the Currency Jonathan Gould said, describing continued breakdowns in internal controls.

Separately, Treasury's Office of Foreign Assets Control announced an $11.6 million settlement involving 475 apparent violations of sanctions programs targeting Russia, Iran, and other countries and activities.

As part of the latest enforcement actions, Bank of America must conduct a review of previously undetected suspicious transactions with an outside party and undergo independent assessments of its compliance controls.

David Hollerith covers a range of developments throughout the financial sector, from Wall Street to banking and asset management to crypto and fintech. Email him at [email protected]. Follow him on X at @DsHollers.

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This article originally appeared on Yahoo Finance at https://finance.yahoo.com/markets/article/bank-of-america-hit-with-12-billion-penalty-over-money-laundering-failures-201623796.html