Bank of America Fined $1.2bn Over Anti-Money Laundering Failures
The US Treasury Department announced on Tuesday that Bank of America must pay a $1.2bn (£910m) penalty after regulators concluded the bank had repeatedly failed to catch potential money laundering and other illicit activity moving through its systems.
Investigators found the lender had not reported more than $5bn in questionable transactions, including roughly $1bn linked to national security and illicit-finance concerns. Among the missed red flags were dealings tied to possible Chinese money-laundering networks and trade-based schemes that regulators said carried “a substantial nexus to the southwest border.”
Treasury officials said much of the problem stemmed from Bank of America leaning too heavily on tips from law enforcement and other financial institutions rather than building its own detection capability — in effect, the department said, the bank had “outsourced to third parties a substantial portion of its proactive detection and reporting obligations.”
As part of the settlement, the bank acknowledged it had “willfully violated” the Bank Secrecy Act, citing shortfalls in its anti-money-laundering program, gaps in due diligence on foreign correspondent accounts, and missed suspicious-activity filings.
Third-largest penalty on record
Treasury Secretary Scott Bessent, announcing what ranks as the department’s third-largest-ever fine, warned that lapses of this scale carry consequences well beyond one institution: “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.”
The total penalty combines a record $750m fine from the Office of the Comptroller of the Currency — the largest the OCC has ever imposed — with an $11.6m settlement from the Office of Foreign Assets Control covering 475 apparent sanctions violations involving Russia, Iran, narcotics trafficking and global terrorism financing. OFAC classified the violations as “non-egregious,” which shaped the smaller size of that portion of the deal.
The timing could hardly be worse for publicity: the announcement landed less than a day before Bank of America was set to post its third-quarter earnings. In a statement emailed to the BBC, the bank said the charge would show up directly in those results: “Our third-quarter results will include a non-tax-deductible charge of $1.2 billion impacting net income by approximately 17 cents per share.” It added that remediation work was already well underway, noting, “We have already dedicated substantial personnel and resources to our ongoing remediation efforts, and those costs are in the current expense base.”
Responding to the BBC separately, Bank of America said: “Our team is far along with and committed to completing the work required to address the issues raised by our regulators.”
Source: BBC News