Bank of America Fined $1.2 Billion Over Money Laundering Failures

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, Treasury Secretary Scott Bessent said in a statement on Tuesday. The declaration accompanied a historic federal enforcement package hitting Bank of America with $1.21 billion in penalties for extensive anti-money laundering and sanctions violations.

The punitive measures arrive as the country's second-biggest bank faces mounting pressure from financial watchdogs over systemic breakdowns in its compliance infrastructure. According to the U.S. Department of the Treasury, the institution admitted that it willfully violated the 1970 Bank Secrecy Act by failing to detect and report over $5 billion in suspicious financial transactions. More than $1 billion of these unreported transfers directly touched priority national security concerns, including Chinese money laundering syndicates, illicit finance along the U.S. southwest border, trade-based money laundering, and potential drug trafficking proceeds.

How Did the Multi-Agency Penalties Break Down?

The enforcement action involves coordinated moves by several federal regulatory bodies. The Financial Crimes Enforcement Network (FinCEN) assessed a $1.2 billion penalty. Additionally, the Office of the Comptroller of the Currency (OCC) imposed a $750 million civil money penalty, which the Treasury stated is the largest fine ever imposed by that federal bank regulatory agency. The Treasury's Office of Foreign Assets Control (OFAC) reached an $11.6 million settlement with Bank of America over 475 apparent sanctions violations.

Government watchdogs found that Bank of America prioritized generating revenue and cutting compliance costs over its legal duty to identify and report illicit finance. FinCEN officials noted that the bank largely relied on external law enforcement requests or alerts from other financial institutions rather than its own internal monitoring tools. By outsourcing its detection duties to third parties, the firm allowed suspicious transactions to go unexamined for long periods.

Why Did the December 2024 Cease-and-Desist Order Fail to Stop the Breaches?

1. In December 2024, Bank of America received a cease-and-desist order addressing deficiencies under the Bank Secrecy Act and warning leadership about compliance weaknesses.
2. In March 2022, the bank was aware that its payment directory included sanctioned banks, but outdated screening filters, human error, and technological failings allowed payments to continue.
3. Between September 2021 and April 2025, Bank of America committed over 475 U.S. sanctions violations, processing over $14.3 million in payments through 35 blocked banks on the U.S. sanctions blacklist.
4. In January 2025, OFAC subpoenaed the firm, prompting a review that revealed the full scope of transactions involving Russia, Iran, Burma, Somalia, international terrorists, and narcotics traffickers.

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. More than a year after the 2024 order, the bank still failed to escalate potentially suspicious activities to investigators for review, operating with an ineffective internal audit function and severe operational breakdowns.

What Are the Market and Operational Consequences for Bank of America?

The enforcement action hits the institution just before the release of its third-quarter financial results. Bank of America disclosed that it will record a $1.2 billion non-tax-deductible charge, cutting net income by roughly $0.17 per share. Shares of the bank fell 2.2% to $52.75 in extended trading after the announcement, after sliding 1.8% in earlier after-hours trading as markets assessed the potential financial and reputational consequences.

As part of the settlement terms, the bank must appoint an independent third-party monitor to review historical transactions and identify previously overlooked suspicious activities. the firm must submit to independent reviews of its anti-money laundering governance, with particular attention to risks related to sanctioned jurisdictions.

How Does This Compare to Recent Actions Against Other Major Institutions?

The latest penalties underscore intensifying U.S. regulatory scrutiny of major financial institutions under strict federal anti-money laundering priorities. The Treasury action is the third-largest penalty ever issued by the department, behind a roughly $4 billion settlement in 2023 with Binance and an approximately $3 billion settlement with Canada-based TD Bank the following year. The action also comes less than a week after regulators issued large settlements against American Express, whose banking arm was fined $350 million by the OCC for insufficient anti-money-laundering controls.

In an emailed statement to Bloomberg, Bank of America highlighted its efforts to resolve the compliance shortcomings. 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, the bank stated.