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

Bank of America has received a $1.2 billion penalty from United States authorities after failing to spot and report illicit financial activity, including transactions potentially connected to Chinese money laundering rings.

The US Treasury Department announced the punishment on Tuesday, revealing that the financial institution neglected to notify federal authorities about more than $5 billion in suspicious funds. Officials stated that approximately $1 billion of that amount presented threats to national security and created illicit finance vulnerabilities.

According to regulators, the financial institution overlooked warning signs on transactions tied to trade-based laundering along the southwest US border, as well as networks operating out of China. The penalty represents the third-largest enforcement sum ever issued by the Treasury Department.

Treasury Secretary Scott Bessent warned that compliance lapses at a firm of this magnitude jeopardize the broader US banking framework by opening it up to substantial financial crime risks. Regulators pointed out that Bank of America leaned heavily on tips and requests from law enforcement agencies and other institutions rather than maintaining sufficient internal oversight, effectively shifting its detection obligations onto outside organizations.

Under the terms of the settlement, Bank of America acknowledged willful violations of the Bank Secrecy Act. The infractions involved failing to operate an adequate anti-money laundering system, omitting mandatory suspicious activity filings, and neglecting necessary due diligence on foreign correspondent banking accounts.

The total penalty incorporates actions from multiple regulatory bodies. The Office of the Comptroller of the Currency issued a record $750 million fine, while the Office of Foreign Assets Control resolved 475 apparent sanctions breaches linked to Iran, Russia, narcotics, and counter-terrorism measures. The sanctions-related settlement totaled $11.6 million, with officials classifying the apparent infractions as non-egregious.

Bank of America stated that it has committed substantial resources and staff toward correcting the issues highlighted by government supervisors, noting that remediation work is well underway. The financial institution confirmed that the non-tax-deductible $1.2 billion expense will be reflected in its third-quarter financial results, reducing net income by around 17 cents per share.