Bank of America has been ordered to pay more than $1.2 billion in penalties after US authorities found serious and long-running failures in its defences against money laundering and sanctions breaches. The announcement landed one day before the bank is due to report quarterly results.
The penalties
The Treasury Department said on Tuesday that its Financial Crimes Enforcement Network, known as FinCEN, fined the bank $1.2 billion. That is the third-largest penalty in Treasury’s history, behind the $3.4 billion Binance settlement in 2023 and the $1.3 billion TD Bank penalty in 2024.
The package has several parts. It includes a $750 million penalty from the Office of the Comptroller of the Currency, the largest in that agency’s history. The OCC amount is credited against FinCEN’s assessment rather than added to it. Separately, the Office of Foreign Assets Control reached an $11.6 million settlement over apparent sanctions violations. The three actions together bring the total to more than $1.21 billion.
What regulators found
The core allegation is that the bank did not report suspicious activity quickly enough. Treasury said Bank of America failed to report more than $5 billion in suspicious transactions on time, with over $1 billion of that touching national security and other priority risks. Those included transactions indicative of Chinese money-laundering networks, fraud, and possible trade-based money laundering with a substantial link to the southwest border.
The sanctions findings were wide-ranging. The bank processed millions of dollars in payments in apparent violation of programmes targeting Russia, Belarus, Iran, Burma, Somalia, narcotics and global terrorism. OFAC settled 475 apparent violations.
Regulators were pointed about the bank’s priorities. Treasury said the bank put revenue ahead of compliance resources, allowing suspicious transactions to go uninvestigated for long periods. Bloomberg reported that authorities said the bank effectively outsourced a key part of its compliance work.
An unfulfilled promise
The case is made harder for the bank by its history. Bank of America signed a cease-and-desist order with the OCC in December 2024 pledging to fix the same compliance problems. The OCC concluded that it had not done enough. The regulator said the bank failed to complete the steps needed to build an effective programme and that serious issues remain.
As part of the Treasury resolution, the bank admitted that it willfully violated the Bank Secrecy Act. The FinCEN order also requires it to hire a third party to review its records and identify suspicious transactions that were never reported.
Treasury Secretary Scott Bessent said that when an institution of this size falls short on these obligations, the consequences reach well beyond the bank itself. The bank sought to strike a different note. A spokesperson said financial crime compliance is serious and the bank is responsible for getting it right.
Market reaction and earnings test
Investors reacted quickly. The shares fell 2.2% to $52.75 in after-hours trading following the announcement. The penalty itself is manageable for a lender of this scale, but the reputational and operational questions are harder to price.
Attention now turns to results. Bank of America reports third-quarter earnings before the US market opens on Wednesday, followed by a call with analysts led by chief executive Brian Moynihan. Analysts expect earnings of about $1.11 per share on revenue of around $30.6 billion. The bank has already tempered expectations. Moynihan said in September that trading revenue would be relatively flat and that investment banking fees would run at roughly $1.6 billion to $1.8 billion.
The results will show whether the compliance costs and the rising bond yields that have weighed on lenders this year are denting profits. Peers have offered a mixed guide. Goldman Sachs beat revenue forecasts and Citigroup beat on profit, while JPMorgan missed and Wells Fargo was mixed.
A wider warning for banks
The message to the industry is clear. The OCC said it expects every bank to run an effective anti-money laundering programme and that those that do not can expect swift and significant action. For compliance chiefs across the sector, the Bank of America case is a reminder that signing a regulatory order is only the start; regulators will judge the bank on what it actually fixes.
