U.S. regulators fined Bank of America more than $1.21 billion for severe, longstanding anti-money laundering and sanctions compliance failures.

  • The U.S. Department of the Treasury imposed total fines nearing $1.2 billion, including a $1.2 billion FinCEN assessment and a historic $750 million OCC civil penalty. 
  • The bank failed to properly report over $5 billion in suspicious activity—including $1 billion tied to national security risks, drug cartels along the southwest border, and foreign illicit networks. 
  • Bank of America expects a non-tax-deductible $1.2 billion charge in its third-quarter earnings report, which will reduce net income by about $0.17 per share. 

Federal financial regulators have ordered Bank of America Corp. (BAC) to pay more than $1.2 billion in civil penalties after widespread, systemic failures in its anti-money laundering (AML) and sanctions compliance programs.

The U.S. Department of the Treasury announced the enforcement actions Tuesday, the third-largest financial penalty in Treasury’s history and the largest ever imposed by the Office of the Comptroller of the Currency (OCC).

The penalties highlight major lapses in how the country's second-largest bank monitored transactions, processed cross-border transfers, and managed customer due diligence. According to government watchdogs, Bank of America prioritized generating revenue and cutting compliance costs over its legal duty to identify and report illicit finance.

BAC stock fell nearly 3% after hours on Tuesday.

Unreported Transactions And National Security Risks

The Financial Crimes Enforcement Network (FinCEN) levied a $1.2 billion penalty after discovering that the institution failed to report more than $5 billion in suspicious transactions. 

More than $1 billion of these unreported transfers directly touched priority national security concerns, including illicit finance along the U.S. southwest border, Chinese money laundering syndicates, trade-based money laundering, and potential drug trafficking proceeds.

FinCEN officials noted that Bank of America 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 bank allowed suspicious transactions to go unexamined for long periods.

"When a bank of this size fails to meet its anti-money laundering and sanctions obligations, the consequences extend far beyond its own walls," Treasury Secretary Scott Bessent said in a statement. "Today's actions send a clear message that even the biggest financial institutions are not above the law."

Regulatory Warning Signs Ignored

The OCC's $750 million civil penalty addresses ongoing Bank Secrecy Act (BSA) violations. Regulators found fundamental gaps in the bank's transaction monitoring systems that left trillions of dollars in activity unmonitored.

Despite entering into a cease-and-desist order with the OCC in December 2024 to correct its deficient compliance infrastructure, Bank of America failed to take meaningful corrective steps. The OCC reported that more than a year after the 2024 order, the bank continued to experience severe operational breakdowns, lacked adequately trained personnel, and operated with an ineffective internal audit function.

In a parallel action, the Treasury’s Office of Foreign Assets Control (OFAC) reached an $11.6 million settlement with Bank of America concerning 475 apparent sanctions violations.

Regulatory findings revealed that technical bugs, miscalibrated screening software, and human errors led the bank to process millions of dollars through blocked foreign institutions and restricted accounts. The illicit fund movements violated multiple U.S. sanctions frameworks targeting Iran, Russia, Belarus, Burma, Somalia, international terrorism, and narcotics networks.

Financial Hit and BofA's Response

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.

The enforcement action comes just before Bank of America releases its third-quarter financial results. The bank 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.

BAC Stock: Retail View 

Retail sentiment on Stocktwits was ‘bullish’ with ‘high’ message volumes. 

BAC stock has lost about 4% year-to-date. 

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