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Bank of America has been fined $1.2 billion by United States authorities after regulators found serious failures in its systems for detecting and reporting potentially suspicious financial activity, raising fresh concerns about the safeguards protecting the country's financial system.
The US Treasury Department announced the penalty on Tuesday, accusing the banking giant of failing to report more than $5 billion in suspicious transactions to the government. According to the department, approximately $1 billion of the activity presented national security and illicit finance risks.
The transactions reportedly included activity potentially connected to Chinese money laundering networks and trade based money laundering with links to the southwestern United States border. Treasury officials said the bank relied excessively on information from external parties, including law enforcement agencies and other financial institutions, instead of strengthening its own internal monitoring systems.
As a result, the department said, Bank of America effectively transferred a substantial part of its responsibility for proactively identifying and reporting suspicious transactions to third parties.
The settlement includes penalties imposed by the Office of the Comptroller of the Currency and the Office of Foreign Assets Control. The comptroller's office issued a $750 million fine, described as the largest penalty in its history.
The sanctions enforcement agency also linked its settlement with the bank to 475 apparent violations involving programmes targeting Russia, Iran, narcotics and global terrorism. It said the $11.6 million settlement reflected its determination that the apparent violations were not considered egregious.
As part of the agreement, Bank of America admitted that it had wilfully violated the Bank Secrecy Act by failing to maintain a compliant anti money laundering programme, carry out required due diligence on foreign correspondent accounts and submit suspicious activity reports.
Treasury Secretary Scott Bessent warned that failures by financial institutions of this size can expose the wider banking system to significant risks, stressing that compliance obligations are essential to preventing illicit financial activity.
Bank of America said it was committed to completing the work required to address concerns raised by regulators. The bank added that it had already devoted substantial personnel and resources to its remediation efforts.
The announcement came less than 24 hours before the bank was scheduled to release its quarterly earnings. It disclosed that the penalty would appear as a non tax deductible charge, reducing net income by approximately 17 cents per share.
The substantial financial penalty represents a significant setback for one of America's largest banks. Beyond its immediate effect on earnings, the settlement highlights the growing regulatory pressure on financial institutions to strengthen internal controls and ensure suspicious transactions are identified before they pose broader risks.
