Major U.S. Bank Hit With $1.21 Billion In Penalties After Ignoring Red Flags

The Treasury Department announced more than $1.21 billion in penalties against Bank of America, the second-largest bank in the U.S., on Tuesday for anti-money laundering and sanctions violations.

The enforcement actions include the largest fine in the history of the Office of the Comptroller of the Currency (OCC) and the third-largest penalty in Treasury history. According to Treasury, Bank of America prioritized revenue while minimizing compliance resources, despite mounting warning signs.

Treasury said Bank of America failed to report more than $5 billion in suspicious transactions on time, including activity indicative of Chinese money laundering networks. The bank also processed hundreds of payments that appeared to violate U.S. sanctions targeting Iran, Russia, and other countries.

The Financial Crimes Enforcement Network (FinCEN) assessed a $1.2 billion penalty against the bank for failing to identify and report suspicious activity. That total includes a $750 million penalty the OCC imposed for deficiencies in the bank’s anti-money laundering program. The Treasury Department’s Office of Foreign Assets Control (OFAC) also reached a separate $11.6 million settlement with the bank over 475 apparent sanctions violations.

“Financial institutions are on the front lines of protecting our economic and national security,” Treasury Secretary Scott Bessent said. He warned that failures at a bank of Bank of America’s size expose the broader U.S. financial system to illicit finance risks.

More than $1 billion of the transactions reported late involved national security risks and other priority concerns, including activity indicative of Chinese money laundering networks, fraud, and potential trade-based money laundering connected to the U.S. southwest border, Treasury said.

As part of its agreement with FinCEN, Bank of America admitted it willfully violated the Bank Secrecy Act by failing to maintain an adequate anti-money laundering program, conduct required checks on accounts for foreign financial institutions, and file suspicious activity reports.

Bank of America told CNBC it had invested billions in compliance and was “far along” in its remediation efforts. 

Spokesperson Christa Robinson said, “Financial crime compliance is serious, and we are responsible for getting it right.” 

The bank said the penalties would 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 the costs of fixing its compliance systems were already reflected in its expenses.

Treasury investigators found that the bank relied heavily on law enforcement inquiries and warnings from other financial institutions to identify suspicious activity instead of using its own systems to flag potential problems.

The bank also allowed suspicious transactions to go uninvestigated for extended periods, delaying reports to authorities. Treasury said it failed to respond promptly to concerns about customers receiving payments from unknown third parties, including potential connections to narcotics trafficking proceeds.

Key compliance staff lacked adequate training, and internal audits failed to identify longstanding problems later uncovered by regulators.

Under the agreement, Bank of America must work with a third party to review past transactions and identify suspicious activity that went undetected. It must also undergo independent reviews of its transaction monitoring systems, customer screening procedures, and oversight of foreign correspondent accounts. Those reviews will examine risks involving the southwest border, drug cartels, potential narcotics trafficking, Iran, and Russia.

The OCC’s $750 million penalty follows a December 2024 order requiring Bank of America to fix deficiencies in its anti-money laundering program.

More than a year after the 2024 order, the bank was still failing to escalate potentially suspicious transactions for investigation. The OCC also found that gaps in its monitoring system allowed potential trade-based money laundering transactions to be processed.

“The bank’s poor response to its BSA deficiencies is unacceptable,” Comptroller of the Currency Jonathan V. Gould said.

Gould said Bank of America processes hundreds of trillions of dollars in transactions worldwide each year and warned that its compliance failures threaten U.S. national and economic security.

OFAC said the 475 apparent sanctions violations included routing payments through blocked banks, allowing designated individuals to make payments and withdraw funds, failing to update sanctions watchlists promptly, and mishandling accounts associated with blocked persons.

The payments appeared to violate sanctions programs targeting Iran, Russia, Belarus, Burma, Somalia, narcotics, and global terrorism.

OFAC described the apparent violations as non-egregious and said the bank had not voluntarily disclosed most of them. As part of the settlement, Bank of America committed to improving its compliance training, testing, and auditing practices.

Treasury warned that banks must maintain effective systems to identify and investigate suspicious transactions rather than rely on law enforcement inquiries or outside referrals to flag potential wrongdoing.

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