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

18:45

By: Azzat Manal

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

Bank of America has been ordered to pay $1.2 billion in penalties over alleged failures to meet US anti-money laundering and financial compliance requirements, according to the US Treasury Department. The action represents one of the largest penalties imposed by the department and highlights growing regulatory scrutiny of financial institutions’ efforts to detect suspicious transactions and prevent illicit funds from entering the banking system.

The Treasury Department said the bank failed to report more than $5 billion in suspicious activity, including approximately $1 billion associated with national security concerns and other high-priority financial crime risks. Authorities cited deficiencies involving suspected money laundering networks and illicit financial activity along the US southwest border.

The Financial Crimes Enforcement Network (FinCEN), part of the Treasury Department, assessed the main penalty. Of the total, $750 million is to go to the Office of the Comptroller of the Currency, marking the largest fine ever imposed by that banking regulator, according to the department.

Treasury officials stressed that financial institutions play a central role in protecting the integrity of the financial system. US Treasury Secretary Scott Bessent said failures by major banks to meet their anti-money laundering and sanctions obligations can expose the wider economy to risks that extend beyond the institutions themselves.

The department also announced an $11.6 million settlement with Bank of America over apparent violations of several sanctions programmes, including measures related to Iran, Russia, narcotics trafficking and international terrorism. Authorities said the bank acknowledged willful violations of the Bank Secrecy Act of 1970, a federal law requiring financial institutions to maintain controls that help detect and prevent money laundering.

In response, Bank of America said it had worked with regulators to resolve the penalties, which stem from issues identified in a previously reported 2024 consent order and a FinCEN investigation. The bank said it had invested billions of dollars in technology and assigned thousands of employees to financial crime prevention, adding that remediation work was well advanced.

The bank also indicated that the $1.2 billion penalty would be recorded as a non-tax-deductible charge in its third-quarter results, reducing quarterly net income by approximately 17 cents per share. The financial impact is expected to draw investor attention as markets assess the bank’s earnings, operating expenses and capacity to maintain its shareholder return programmes.

Bank of America shares came under pressure following news of the penalties, adding to concerns about the cost of regulatory compliance and the potential effect on investor confidence. Analysts also examined whether the action could influence the bank’s ability to sustain its pace of share buybacks, although the Treasury announcement did not impose an asset cap restricting its growth.

The case follows another major enforcement action against a US financial institution, with American Express recently facing a $350 million penalty over similar anti-money laundering shortcomings. Together, the cases underline regulators’ continued focus on transaction monitoring, suspicious activity reporting and compliance with sanctions requirements.

The Treasury Department’s latest action ranks among its largest financial penalties, following major settlements involving cryptocurrency exchange Binance and Canada-based TD Bank in previous years. These cases demonstrate the financial and legal consequences that can arise when authorities determine that institutions have failed to maintain adequate safeguards against illicit finance.

For Bank of America, the immediate challenge will be to complete the required corrective measures while maintaining confidence among regulators, customers and investors. The case also serves as a reminder that effective financial crime controls remain a core responsibility for banks operating within the US financial system.