Bank of America Hit With $1.2 Billion Fine Over Money Laundering Failures

Bank of America (NYSE: BAC) faces more than $1.2 billion in regulatory penalties after U.S. authorities uncovered extensive anti-money laundering (AML) and sanctions compliance violations, according to the Financial Times. The enforcement action follows allegations that the banking giant failed to detect and report over $5 billion in suspicious financial transactions.

The U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) imposed a $1.2 billion penalty, including a $750 million civil fine from the Office of the Comptroller of the Currency (OCC). The OCC penalty marks the largest enforcement fine in the regulator's history.

Additionally, the Treasury's Office of Foreign Assets Control (OFAC) reached an $11.6 million settlement with Bank of America over apparent violations of sanctions targeting Russia, Iran, terrorism-related activities, and international drug trafficking.

Regulators identified significant weaknesses in the bank's transaction monitoring systems, allowing potentially illicit financial activities to go undetected. More than 20% of the $5 billion in suspicious transfers reportedly involved national security concerns, including suspected Chinese money laundering networks and illegal financial operations along the U.S.-Mexico border.

The regulatory action comes ahead of Bank of America's third-quarter earnings announcement, adding uncertainty for investors. Following the news, BAC shares declined 1.8% in after-hours trading as markets assessed the potential financial and reputational consequences.

The latest penalties also expose persistent compliance problems despite previous regulatory warnings. In December 2024, Bank of America received a cease-and-desist order addressing deficiencies under the Bank Secrecy Act (BSA), which requires financial institutions to identify and report suspicious transactions.

Federal regulators criticized the bank's leadership for allegedly downplaying compliance weaknesses and failing to implement adequate corrective measures. OCC chief Jonathan Gould described the violations as "egregious and continued," citing insufficient expertise and training among personnel responsible for overseeing financial crime prevention.

Under the new enforcement agreement, Bank of America must appoint an independent third-party monitor to review historical transactions and identify potentially overlooked suspicious activities.

The penalties underscore intensifying U.S. regulatory scrutiny of major financial institutions. The action follows a separate $350 million OCC fine against American Express for longstanding compliance failures, highlighting growing pressure on banks to strengthen anti-money laundering controls and sanctions enforcement.