Bank of America has been fined $1.21 billion by US regulators for failing to detect potential money laundering and other illicit activity. The bank says the penalty will cut third-quarter earnings, and its shares fell after hours.
Bank of America has been fined $1.21 billion by US regulators for widespread failures to detect potential money laundering and other illicit activity. The bank said the penalty will hurt third-quarter earnings.
The Treasury Department said the fine, the third-largest in department history, stems from the bank's failure to report more than $5 billion in suspicious activity, including $1 billion that posed national security-related and other priority illicit finance risks.
Regulators cite a deficient compliance program
According to Treasury Secretary Scott Bessent, "Financial institutions are on the front lines of protecting our economic and national security," he said in a statement.
In building compliance programs, the bank prioritized its revenues and overly relied on inquiries from outside parties, such as law enforcement and other financial institutions, instead of its own internal controls, the Treasury said.
Separately, the Office of the Comptroller of the Currency levied a $750 million civil penalty, the largest ever for the regulator. It cited failures to address shortcomings in anti-money laundering programs identified in a 2024 cease-and-desist order. The regulator said the compliance program was deficient and ineffective.
The bank also paid an $11.6 million fine to the Office of Foreign Assets Control for over 400 apparent violations of numerous sanctions programs. The Treasury said the bank mistakenly processed millions of dollars in payments that violated sanctions programs targeting countries including Russia and Iran.
Earnings hit and share reaction
Under the consent order, the bank must hire an independent third party to review past transactions and report suspicious activity it failed to detect to FinCEN.
A Bank of America spokesperson said third-quarter results, due Wednesday, will include a non-tax-deductible charge of $1.2 billion, reducing quarterly net income by approximately 17 cents a share.
Shares were down 2.7% in after-hours trading after closing the day down 1.1%. UBS analyst Erika Najarian said the penalty is likely to add to negative investor sentiment and raise concerns about whether the bank can maintain its roughly $6 billion quarterly share buyback pace.
The fine comes days after American Express was hit with a $350 million penalty for similar anti-money laundering shortcomings.
Source: Investing.com
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