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 on Tuesday.
Federal regulators hit Bank of America with $1.2 billion in fines on Tuesday, penalizing the country’s second-largest bank for systemic failures to detect and report suspicious transactions, including cartel-linked cash and Chinese money-laundering networks. The Treasury Department’s enforcement action ranks as the third-largest penalty in the agency’s history.
Regulators found that the lender failed to flag more than $5 billion in suspicious transactions, allowing illicit funds to move through the financial system unchecked.
Treasury and OCC Penalties Detail Widespread Compliance Deficiencies
The enforcement package combines a $1.2 billion fine assessed by the Financial Crimes Enforcement Network and a $750 million civil monetary penalty levied by the Office of the Comptroller of the Currency. The OCC penalty marks the largest ever imposed in the regulator’s 163-year history, though that amount is credited directly toward the FinCEN assessment rather than added to it.
Treasury Secretary Scott Bessent announced the penalties in a Tuesday statement, emphasizing that major institutions must adhere to federal safeguards.
Today’s actions send a clear message that even the biggest financial institutions are not above the law.
Treasury Secretary Scott Bessent, U.S. Treasury Department
Federal investigators revealed that Bank of America admitted to willfully violating the 1970 Bank Secrecy Act. According to the Treasury Department, the institution effectively outsourced its detection responsibilities to law enforcement and outside banks while letting uninvestigated suspicious activity accumulate for extended periods.
Treasury Secures Millions over Sanctions Violations
Beyond the primary anti-money laundering penalties, the Treasury’s Office of Foreign Assets Control secured an $11.6 million settlement with the bank. That agreement resolves apparent violations of federal sanctions programs targeting Iran, Russia, global terrorism, and narcotics trafficking.
The unflagged transfers included red flags tied to Chinese money-laundering networks and southwest border illicit finance. Jonathan Gould characterized the underlying compliance breakdowns as egregious and continued
violations of federal oversight rules.
Financial Penalties Weigh on Quarterly Results
The financial penalties weighed heavily on the institution’s third-quarter results. Bank of America reported net income of $6.93 billion, or $0.91 per share, falling short of the $1.10 per share analysts anticipated.
Excluding the non-tax-deductible charge of $1.2 billion—which shaved roughly 17 cents per share from earnings—the lender earned $8.1 billion, or $1.08 per share. Revenue rose 3% to $30 billion, trailing the roughly $30.6 billion consensus forecast.
Investors reacted swiftly to the news. Bank of America stock dropped 4.7% on Wednesday after paring some earlier losses, marking the stock’s worst single-day decline in a month.
Management Assigns Thousands to Remediation Efforts
The enforcement action builds upon an earlier December 2024 cease-and-desist order that required management to address persistent weaknesses in transaction monitoring and customer due diligence. Regulators noted that the bank failed to make sufficient progress under that prior directive.
During a call with analysts, CEO Brian Moynihan said the institution spent more than $200 million on remediation efforts during the quarter and assigned thousands of employees to the cleanup.
We have a clear understanding of what we need to do. We’re doing it. We’ll complete it. And it is the focus of management to get it cleaned up.
Brian Moynihan, Chief Executive Officer, Bank of America
Moynihan noted that the bank worked to clarify expectations with regulators under a modified oversight regime, stating that leadership now has explicit metrics to follow. Chief Financial Officer Alastair Borthwick added that the lender feels a substantial amount of the required remediation is complete. While no asset growth restrictions were attached to the consent order, executives declined to estimate when the broader cleanup will conclude.
Political Reaction to the Settlement
The resolution drew sharp criticism from lawmakers who argued the financial penalties fail to deter corporate wrongdoing.
Slap-on-the-wrist fines have become the cost of doing business on Wall Street and are no deterrent. Big banks should be subject to structural punishments, and their executives should be held personally accountable when they break the law.
Sen. Elizabeth Warren, D-MA
The action places Bank of America alongside other major financial institutions facing historic penalties under federal anti-money laundering regimes, following a $3.4 billion FinCEN penalty against Binance in 2023 and a settlement involving TD Bank that included a $1.3 billion FinCEN fine.
