Bank of America was hit with more than $1.2 billion in federal penalties Tuesday after regulators said the nation’s second-largest bank failed for years to report more than $5 billion in suspicious transactions and fix longstanding anti-money-laundering problems.
More than $1 billion of the unreported activity involved national security and other high-priority risks, including Chinese money-laundering networks and activity tied to the southwest border, Treasury said in a press release.
The action also lands less than a day before the bank reports quarterly earnings Wednesday morning.
Treasury’s Financial Crimes Enforcement Network, which enforces anti-money-laundering rules, said the $1.2 billion penalty is the third-largest in Treasury history. Treasury separately announced an $11.6 million settlement over sanctions violations.
As part of the settlement, Bank of America admitted that it willfully violated the Bank Secrecy Act by failing to maintain a compliant anti-money-laundering program, conduct required due diligence on foreign correspondent accounts and file suspicious activity reports, according to Treasury.
“Today’s actions send a clear message that even the biggest financial institutions are not above the law,” Treasury Secretary Scott Bessent said in the press release.
Bank of America said in a statement to CNBC that the bank has invested billions in compliance and is “far along” in remediation efforts. The bank said the penalties will result in a $1.2 billion non-tax-deductible charge in its third-quarter results, reducing net income by about 17 cents per share. It said remediation costs are already reflected in its current expense base.
“Financial crime compliance is serious, and we are responsible for getting it right,” spokesperson Christa Robinson said.
The bank’s stock was down about 2% in after-hours trading on the news.
The new penalties will put renewed focus on the record of longtime CEO Brian Moynihan, who took over in 2010 and spent the early years of his tenure resolving tens of billions of dollars in mortgage-related legal and regulatory matters tied largely to decisions made before he became CEO. For much of the past decade, Moynihan has emphasized what he calls “responsible growth,” as Bank of America sought to distance itself from the risk-taking and legal problems that followed the 2008 financial crisis. Moynihan is scheduled to appear on CNBC’s “Squawk on the Street” at 10:20 a.m. ET Wednesday following the bank’s earnings report.
Treasury said the bank “prioritized its revenues” while minimizing the impact on compliance resources. The agency said the bank relied so heavily on law-enforcement inquiries and referrals from other financial institutions that regulators said it effectively outsourced part of its responsibility for detecting suspicious activity.
The penalty from Treasury’s Financial Crimes Enforcement Network came in coordination with the Office of the Comptroller of the Currency, or OCC, an independent bureau within the department, which announced a $750 million civil money penalty against Bank of America. That sum, which is credited as part of the $1.21 billion total, is the largest penalty OCC has ever levied, the office said.
The office accused the bank of serious violations of the Bank Secrecy Act and anti-money laundering rules, and of failing to fix its deficiencies in accordance with a cease-and-desist order it signed in 2024.
“Despite its obligation to the American people as a national-chartered, global systemically important bank, the bank’s BSA/AML compliance program continues to reflect widespread breakdowns in internal controls, which threatens U.S. national and economic security,” Comptroller of the Currency Jonathan Gould said in the OCC press release. “The bank’s poor response to its BSA deficiencies is unacceptable. The second largest bank’s egregious and continued BSA violations warrant the OCC imposing its largest [civil money penalty] ever assessed against a bank,” Gould said. “The OCC expects all banks to have an effective BSA/AML compliance program. Those that do not can expect swift and significant action from the OCC.”
The 2024 order had identified a “breakdown” in Bank of America’s systems for detecting and reporting suspicious activity, including a “systemic failure” to set appropriate thresholds for triggering investigations. It also said the bank had failed to make “acceptable substantial progress” correcting an earlier customer due diligence problem. Treasury said the failures included red flags involving possible narcotics-trafficking proceeds, fraud and potential trade-based money laundering that were not addressed in a timely way.
Bank of America will also be required to conduct a third-party review for suspicious transactions that went undetected and undergo independent reviews of its transaction-monitoring and customer due-diligence programs, Treasury said.
Bank of America was ordered Tuesday to pay $1.2 billion to the Treasury Department, which said it violated anti-money laundering and sanctions laws. The penalty is the third largest ever issued in Treasury history, the agency said. As part of that total, the bank was ordered to pay $750 million to the Office of the Comptroller of the Currency, the largest fine it has ever levied.
As the second-largest bank in the country, Bank of America has more than 70 million clients and processes about $4.5 trillion in payments for individual customers every year. In addition, the bank handles $450 trillion in payments for corporate customers, including payrolls, corporate credit cards and supplier payments.
The Treasury Department said Bank of America “admits that it willfully violated” the Bank Secrecy Act and “failed to maintain” an anti-money laundering program that met minimum requirements under the law. The bank also admitted having failed to file mandatory Suspicious Activity Reports.
“Bank of America failed to timely report to FinCEN over $5 billion dollars in suspicious transactions, with over $1 billion of this activity implicating national security-related and other priority illicit finance risks, including suspicious transactions indicative of Chinese Money Laundering Networks, fraud, and potential trade-based money laundering with a substantial nexus to the southwest border,” the Treasury Department said in a statement.
FinCEN is the Financial Crimes Enforcement Network, which combats money laundering, illicit financial activities and terrorist financing networks around the world.
“Financial crime compliance is serious, and we are responsible for getting it right,” Bank of America said in a statement to NBC News. “We have invested billions of dollars in technology and dedicated thousands of employees to combat financial crime, and our team is far along with and committed to completing the work required to address the issues raised by our regulators.”
“We will continue to support federal and local law enforcement across thousands of investigations and report hundreds of thousands of suspicious activity reports each year.”
In addition to the FinCEN violations, the Treasury Department said Bank of America is also settling “its potential civil liability for 475 apparent violations of multiple sanctions programs” with the Office of Foreign Assets Control, which oversees sprawling U.S. sanctions.
The company “processed millions of dollars in payments in apparent violation of sanctions programs targeting Russia, Belarus, Iran, Burma, Somalia, narcotics, and global terrorism,” the Treasury Department said.
Bessent said, “When a bank of this size fails to meet its anti-money laundering and sanctions obligations, the consequences extend far beyond its own walls, exposing the entire U.S. financial system to significant illicit finance risks.”
Bank of America will report its third-quarter earnings shortly before 7 a.m. ET Wednesday.
