bank of america The nation’s second-largest bank was slapped with a federal fine of more than $1.2 billion on Tuesday after regulators said it reported more than $5 billion in suspicious transactions and failed to resolve long-standing anti-money laundering problems.
More than $1 billion in unreported activity involved national security and other high-priority risks, including activities related to Chinese money laundering networks and the southwest border, the Treasury Department said in a press release.
The move comes less than a day before the bank releases its quarterly results on Wednesday morning.
The Treasury Department’s Financial Crimes Enforcement Network, which enforces anti-money laundering regulations, assessed a $1.2 billion penalty, the third largest in Treasury Department history, the bureau said. The Treasury Department separately announced an $11.6 million settlement for sanctions violations.
As part of the settlement, Bank of America admitted that it knowingly violated the Bank Secrecy Act by failing to maintain a compliant anti-money laundering program, conduct required due diligence on foreign correspondent accounts, and file suspicious activity reports, according to the Treasury Department.
“Today’s actions send a clear message that even large financial institutions are not above the law,” Treasury Secretary Scott Bessent said in a press release.
Bank of America said in a statement to CNBC that the bank has invested billions of dollars in compliance efforts and is making “significant progress” in its improvement efforts.
The bank said the fine would result in a non-tax deductible charge of $1.2 billion in its third quarter, reducing its net income by about 17 cents per share. He said the cost of repairs is already reflected in the current cost base.
“Financial crime compliance is serious and we have a responsibility to get it right,” spokeswoman Krista Robinson said.
The bank’s stock price fell about 2% in after-hours trading on the news.
The Treasury said the bank had “prioritized the bottom line” while minimizing the impact on compliance resources. The agency said the bank relies heavily on law enforcement investigations and referrals from other financial institutions, and regulators have effectively outsourced some of its responsibility for detecting suspicious activity.
The fine from the Treasury Department’s Financial Crimes Enforcement Network was made in conjunction with the Office of the Comptroller of the Currency (OCC), an independent agency within the department, which announced a $750 million civil penalty against Bank of America.
The amount, included as part of a total $1.21 billion, is the largest fine ever imposed by the OCC, the agency said.
