US fines Bank of America $1.2 billion over anti-money laundering failures

The US Department of the Treasury announced on Tuesday that Bank of America has been fined $1.2 billion (about €1.07 billion) for failing to detect and report potential money laundering and other illicit activity. BBC reported the news. The penalty is the third-largest the Treasury has ever imposed.

What the Treasury found

According to the Treasury, the bank did not alert the government to suspicious activity totalling more than $5 billion. Around $1 billion of those transactions posed national security risks and facilitated illicit financial activity. The gaps included failing to flag deals that may have involved Chinese money laundering networks, as well as trade-based money laundering with a significant link to the southwest US border.

The department said the bank relied too heavily on requests from outside parties, such as law enforcement and other financial institutions, rather than its own internal controls. In effect, it handed a significant part of its proactive detection and reporting obligations to third parties.

Bank of America partly admitted that it had "willfully violated" the Bank Secrecy Act by failing to maintain an adequate anti-money laundering programme, failing to carry out required due diligence on foreign correspondent accounts, and failing to file suspicious activity reports.

Structure of the penalty

The total includes penalties set by the Office of the Comptroller of the Currency (OCC) and the Office of Foreign Assets Control (OFAC). The OCC's $750 million fine is the largest it has ever imposed. OFAC said its settlement with the bank covers 475 apparent violations of sanctions programmes, including those related to Russia, Iran, narcotics trafficking and global terrorism.

Treasury Secretary Scott Bessent said that when a bank of this size fails to meet its anti-money laundering and sanctions obligations, the consequences extend well beyond the institution and expose the entire US financial system to significant illicit finance risks.

The bank's response

A bank spokesperson told the BBC that its team had made considerable progress and was committed to completing the work needed to address the issues raised by regulators. The announcement came less than 24 hours before the bank was due to report quarterly earnings. The bank said its third-quarter results would include a non-tax-deductible expense of $1.2 billion, reducing net profit by roughly 17 cents per share.