Treasury hits Bank of America with record $1.2 billion penalty over money-laundering failures

The U.S. Treasury Department on Tuesday imposed roughly $1.2 billion in penalties on Bank of America, finding that the country's second-largest bank willfully violated federal anti-money-laundering law for years, failed to report more than $5 billion in suspicious transactions, and let hundreds of payments move through institutions and to people subject to U.S. sanctions.

The combined action, announced jointly by the Treasury Department, its Financial Crimes Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency (OCC), is the third-largest penalty in Treasury's history and the largest civil money penalty the OCC has ever levied against a bank. A separate, smaller settlement with the Office of Foreign Assets Control (OFAC) covers sanctions violations tied to Russia, Iran, Belarus and other programs.

What happened

Regulators said Bank of America admitted it willfully violated the Bank Secrecy Act, the 1970 law requiring banks to help detect and prevent money laundering. According to the Treasury's enforcement notice, the bank maintained an anti-money-laundering program that fell short of legal minimums, skipped required due-diligence checks on foreign correspondent accounts, and routinely filed suspicious activity reports late — when it filed them at all.

Examiners found the bank knew for years that employees were not referring large volumes of potentially suspicious transactions for further investigation, and did not fix the underlying gaps even after regulators flagged them. The deficiencies let more than $5 billion in transactions go unreported in a timely manner, Treasury said, including over $1 billion connected to what it called priority national-security risks: Chinese money-laundering networks tied to fentanyl trafficking, trade-based laundering schemes along the southwest border, and other illicit-finance activity.

The numbers

• FinCEN assessed a $1.2 billion civil penalty, crediting the bank for the OCC's parallel fine against the same conduct.
• The OCC's $750 million penalty — credited toward the FinCEN total rather than paid on top of it — is the largest the agency has ever imposed, according to its own prior enforcement record.
• OFAC separately settled for $11.6 million over 475 apparent violations spanning sanctions programs on Russia, Belarus, Iran, Myanmar, Somalia, narcotics trafficking and global terrorism, detailed in the agency's enforcement release.
• Only the Binance settlement of 2023 and the roughly $3 billion TD Bank penalty of 2024 rank higher in Treasury's enforcement history.

Bank of America said the penalties will show up as a $1.2 billion non-tax-deductible charge in its third-quarter results, cutting net income by about 17 cents a share. The bank is due to report those results Wednesday morning, less than a day after the enforcement action became public, through its previously scheduled earnings release.

Years of warnings

The case did not come out of nowhere. The OCC first identified significant deficiencies in the bank's Bank Secrecy Act program in 2023 and, in December 2024, issued a cease-and-desist order requiring Bank of America to overhaul its anti-money-laundering and sanctions compliance. At the time, the bank said it had been working with the OCC for roughly a year and did not expect the order to carry a material financial impact.

Tuesday's findings show that confidence was premature. Regulators said examinations after the 2024 order turned up continued, widespread breakdowns in internal controls — including gaps that allowed potential trade-based money laundering to go undetected — and transaction-monitoring systems that failed to adequately cover trillions of dollars in activity processed by the bank each year.

Who is affected

Bank of America serves more than 70 million consumer and small-business clients and processes trillions of dollars in payments annually, making it one of the plumbing systems of the U.S. financial network. Treasury officials argued that is precisely why the lapses matter beyond the bank's own books: when an institution of that size fails to screen transactions properly, the risk is that sanctioned actors, drug-trafficking networks and other illicit financiers gain easier access to the formal banking system.

For shareholders, the immediate effect is financial — the roughly 17-cent-per-share hit to third-quarter earnings — layered on top of a stock that had already been trading lower Tuesday as the penalty became public, according to NBC News. Bank customers are not expected to see direct account-level consequences; the enforcement actions target the bank's compliance infrastructure rather than any individual account or transaction reversal.

Reaction

"Today's actions send a clear message that even the biggest financial institutions are not above the law."

That was Treasury Secretary Scott Bessent, announcing the penalties and arguing, as reported by the Associated Press, that when a bank of Bank of America's size fails its obligations, the risk extends well beyond its own walls and into the broader financial system. Comptroller of the Currency Jonathan Gould was similarly pointed, faulting the bank for failing to fix known problems despite repeated warnings from examiners, according to Fox Business.

Bank of America did not dispute the findings. In a statement, the bank said financial-crime compliance is a serious responsibility it is committed to getting right, pointing to billions of dollars invested in technology and thousands of employees dedicated to the task. The bank said it has made "substantial progress" addressing the deficiencies regulators identified and will continue assisting law-enforcement agencies with financial-crime investigations.

What happens next

The settlements require Bank of America to bring in an independent third party to conduct a "lookback" review of transactions that should have been flagged but were not, and to undergo further independent assessment of its anti-money-laundering controls. The bank must also make specific sanctions-compliance commitments covering staff training, testing and auditing, with continued reporting to federal regulators on its progress. Neither the Treasury notice nor the accompanying agency statements specified a timeline for completing the review or named an outside monitor.

The penalty lands at an awkward moment for the bank: it is due to report third-quarter earnings within a day of the announcement, meaning investors will absorb news of the record fine and the quarterly results in quick succession. How much scrutiny the bank faces going forward — from Congress, from other regulators, or in parallel state-level actions — will likely depend on what the lookback review turns up once it gets underway.