Bank of America Hit With $1.21 Billion Anti-Money Laundering Penalty
US regulators penalize the second-largest bank for widespread compliance monitoring failures.
1Record Penalties Imposed
US regulators fined Bank of America $1.21 billion for failing to detect illicit financial activity and monitor transactions. FinCEN assessed a $1.2 billion fine, crediting the Office of the Comptroller of the Currency's record $750 million penalty. The bank also paid $11.6 million to OFAC for sanctions violations.
2Severe Systemic Failures
The Treasury Department revealed that Bank of America failed to report over $5 billion in suspicious activity, including $1 billion tied to national security risks. Regulators stated the bank prioritized revenue over compliance, overly relying on external law enforcement inquiries instead of establishing proper internal monitoring and automated controls.
3Massive Backlog and Omissions
Internal management reports showed the bank skipped filing suspicious activity reports on 18% to 44% of flagged activity between 2019 and 2023. The review backlog peaked at nearly 200,000 cases in 2024. Additionally, roughly 33,300 outgoing wire transfers totaling $1 billion transmitted inaccurate sender data.
4Credit Portfolio Scrutiny
Regulators found serious gaps across diverse banking segments beyond standard retail checking accounts. OCC examiners sampled Bank of America's $102 billion credit card portfolio, initially flagging just 10 accounts. That focused review quickly exposed hundreds of millions of dollars in unreported, potentially illicit customer transactions.
5Sanctions Breaches Detailed
The Office of Foreign Assets Control penalized Bank of America over more than 400 apparent sanctions violations. According to regulators, the bank erroneously processed millions of dollars in payments tied to heavily sanctioned jurisdictions, including Russia and Iran, underscoring critical deficiencies within its international screening operations.
6Immediate Earnings Hit
The lender announced a non-tax-deductible charge of $1.2 billion for its third-quarter financial results, reducing net income by approximately 17 cents per share. Bank of America shares dropped 2.7% in after-hours trading, while analysts had previously estimated adjusted earnings per share of $1.10.
7Capital and Growth Outlook
UBS analyst Erika Najarian warned the penalty could escalate operational expenses and pressure the bank's $6 billion quarterly share buyback program. Crucially, regulators did not impose an asset cap, sparing the second-largest US bank from the severe growth restrictions that previously hit competitors.
8Mandated Remediation Ahead
Bank of America must hire an independent third party to review past unflagged transactions and submit delayed reports to FinCEN. This penalty follows a $350 million fine on American Express, reflecting a broader regulatory enforcement crackdown across major consumer-facing financial institutions and payment networks.