Bank of America’s $1.21 billion fine highlights US banks’ anti-money laundering failures

According to the U.S. Department of the Treasury, the enforcement actions announced on October 13 include the third-largest penalty in the department's history and the largest ever imposed by the Office of the Comptroller of the Currency (OCC). More than $1 billion of the suspicious transactions involved national security and other priority financial crime risks, including activity indicative of Chinese money laundering networks, fraud and potential trade-based money laundering linked to the southwestern U.S. border.

U.S. Treasury Secretary Scott Bessent warned that failures at major financial institutions could threaten the broader financial system. He said the consequences of inadequate compliance extend beyond individual banks, "exposing the entire U.S. financial system to significant illicit finance risks."

The Treasury said Bank of America had prioritized revenue over compliance requirements and relied heavily on inquiries from law enforcement agencies and other financial institutions rather than its own monitoring systems. In its settlement with the Financial Crimes Enforcement Network (FinCEN), the bank admitted to willfully violating the Bank Secrecy Act by failing to maintain an adequate anti-money laundering program, conduct required due diligence on certain foreign bank accounts and file suspicious activity reports.

The penalties involve three regulatory actions. FinCEN assessed a $1.2 billion penalty, which includes credit for a $750 million civil penalty imposed by the OCC. Separately, Bank of America agreed to pay approximately $11.6 million to the Office of Foreign Assets Control (OFAC) to settle 475 apparent sanctions violations. These involved transactions subject to sanctions programs targeting Russia, Belarus, Iran, Myanmar, Somalia, narcotics trafficking and global terrorism.

The OCC had previously identified significant weaknesses in the bank's compliance systems and issued a cease-and-desist order in December 2024 requiring corrective measures. However, regulators found that the bank's anti-money laundering program remained deficient and ineffective, with weaknesses in transaction monitoring resulting in delayed reporting of suspicious transactions worth billions of dollars.

More than a year after the 2024 order, Bank of America continued to fail to escalate potentially suspicious transactions for investigation. The OCC also identified a systemic gap in the bank's monitoring program that allowed potential trade-based money laundering transactions to be processed without adequate scrutiny.

Comptroller of the Currency Jonathan Gould described the violations as egregious and persistent, saying the bank's failure to address longstanding compliance weaknesses justified the OCC's largest financial penalty to date. He warned that financial institutions failing to maintain effective anti-money laundering programs could face significant regulatory action.

Under the settlement terms, Bank of America must engage an independent third party to review past transactions, identify suspicious activity that escaped detection and report the findings to FinCEN. The bank must also undergo independent assessments of its transaction monitoring, customer due diligence and foreign correspondent banking controls.

"Financial crime compliance is serious, and we are responsible for getting it right," Bank of America said in a statement. The lender added that it had invested billions of dollars in technology and assigned thousands of employees to combat financial crime.

The financial penalties have also affected the bank's earnings. On October 14, Bank of America reported third-quarter net income of $6.9 billion, or $0.91 per diluted share. Its results included a non-tax-deductible regulatory settlement charge of $1.2 billion, reducing earnings by approximately $0.17 per share.

Several major U.S. financial institutions have faced substantial penalties for similar compliance failures in recent years.

In November 2023, cryptocurrency exchange Binance agreed to a $3.4 billion FinCEN penalty and a separate $968 million OFAC settlement for violations of anti-money laundering and sanctions laws. The agreement also required five years of independent monitoring. The FinCEN penalty remains the largest in U.S. Treasury history.

In October 2024, TD Bank's U.S. subsidiaries received a record $1.3 billion FinCEN penalty as part of a broader settlement exceeding $3 billion. The bank pleaded guilty to violations of the Bank Secrecy Act, while the OCC imposed an asset growth restriction limiting its U.S. banking subsidiaries to $434 billion in assets.

Earlier, in 2018, U.S. Bank was assessed a $185 million civil penalty for willful violations of the Bank Secrecy Act. Regulators found that the institution had configured its monitoring software to limit the number of suspicious activity alerts rather than expanding its capacity to investigate potentially illicit transactions.

The Bank of America settlement came just five days after American Express National Bank received a $350 million civil penalty from the OCC on October 8. Regulators cited systemic failures in the bank's anti-money laundering controls that resulted in approximately $13 billion in suspected trade-based money laundering activity not being properly identified, evaluated and reported over the preceding decade.

Earlier, Qazinform News Agency reported that the U.S. Secretary of State is set to travel to Uzbekistan and India from October 17 to 22.