Bank of America was hit with more than $1.2 billion in federal penalties Tuesday after regulators said the nation’s second-largest bank failed for years to report more than $5 billion in suspicious transactions and fix longstanding anti-money-laundering problems.
More than $1 billion of the unreported activity involved national security and other high-priority risks, including Chinese money-laundering networks and activity tied to the southwest border, Treasury said in a press release.
The action also lands less than a day before the bank reports quarterly earnings Wednesday morning.
Treasury’s Financial Crimes Enforcement Network, which enforces anti-money-laundering rules, assessed a $1.2 billion penalty, which the agency said is the third-largest in Treasury history. Treasury separately announced an $11.6 million settlement over sanctions violations.
As part of the settlement, Bank of America admitted that it willfully violated the Bank Secrecy Act by failing to maintain a compliant anti-money-laundering program, conduct required due diligence on foreign correspondent accounts and file suspicious activity reports, according to Treasury.
“Today’s actions send a clear message that even the biggest financial institutions are not above the law,” Treasury Secretary Scott Bessent said in the press release.
Bank of America said in a statement to CNBC that the bank has invested billions in compliance and is “far along” in remediation efforts.
The bank said the penalties will result in a $1.2 billion non-tax-deductible charge in its third-quarter results, reducing net income by about 17 cents per share. It said remediation costs are already reflected in its current expense base.
“Financial crime compliance is serious, and we are responsible for getting it right,” spokesperson Christa Robinson said.
The bank’s stock was down about 2% in after-hours trading on the news.
Treasury said the bank “prioritized its revenues” while minimizing the impact on compliance resources. The agency said the bank relied so heavily on law-enforcement inquiries and referrals from other financial institutions that regulators said it effectively outsourced part of its responsibility for detecting suspicious activity.
The penalty from Treasury’s Financial Crimes Enforcement Network came in coordination with the Office of the Comptroller of the Currency, or OCC, an independent bureau within the department, which announced a $750 million civil money penalty against Bank of America.
That sum, which is credited as part of the $1.21 billion total, is the largest penalty OCC has ever levied, the office said.
