US fines Bank of America US$1.2 billion for anti-money laundering violations

WASHINGTON: The US Treasury Department said on Tuesday that it was imposing penalties of more than US$1.2 billion on Bank of America, citing "violations of anti-money laundering and sanctions laws".

The second-biggest US bank failed to properly report more than US$5 billion in "suspicious transactions", the department said.

Some of these involved national security risks and other concerns, including transactions "indicative of Chinese money laundering networks" and illicit finance around the southwest US border.

The overall charge involves US$1.2 billion assessed by the Treasury Department's Financial Crimes Enforcement Network. This includes a US$750 million civil penalty from a key bank regulator, the Office of the Comptroller of the Currency (OCC).

The Treasury's Office of Foreign Assets Control also announced an US$11.6 million settlement with the bank over "apparent violations of numerous sanctions programmes, including on Iran, Russia, narcotics, and global terrorism".

"Today's actions send a clear message that even the biggest financial institutions are not above the law," US Treasury Secretary Scott Bessent said in a statement.

"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 US financial system to significant illicit finance risks," he said.

The announcement marks a blow to Bank of America just a day before it reports its third-quarter earnings.

A Bank of America spokesperson told AFP its results would include a US$1.2 billion charge, reducing net income by around 17 cents per share.

The spokesperson added that the institution was committed to completing the work needed to address issues raised by regulators.

"We will continue to support federal and local law enforcement across thousands of investigations and report hundreds of thousands of suspicious activity reports each year," the spokesperson said.

US regulators have published a consent order requiring Bank of America to work with a third party to identify and report suspicious transactions that went undetected.

The institution will also have to undergo an independent review of its programmes for monitoring suspicious activity and other forms of due diligence.

The bank is also subject to a December 2024 cease-and-desist order calling for it to address issues in its anti-money laundering programme and compliance with the Bank Secrecy Act.

However, the Treasury noted on Tuesday that the bank "failed to prioritise" compliance despite agreeing to the 2024 order.

Due to Bank of America's "egregious and continued" violations of the Bank Secrecy Act, the OCC imposed its largest civil money penalty against a bank, Comptroller of the Currency Jonathan Gould said.

Bank of America shares were down 2.6 per cent in after-hours trading following the Treasury's announcement.