TLDR
US regulators have hit Bank of America with more than US$1.2 billion in combined penalties after the bank admitted wilfully failing to report over US$5 billion in suspicious transactions, including activity linked to Chinese money-laundering networks. Treasury said the actions include the third-largest penalty in its history and the largest the OCC has ever imposed.
Third-largest Treasury enforcement action on record
Bank of America has been hit with more than US$1.21 billion in combined penalties after admitting it wilfully failed to maintain an adequate anti-money-laundering programme and report suspicious transactions to US authorities. Treasury said the actions include the third-largest penalty in its history and the largest ever imposed by the Office of the Comptroller of the Currency.[1]
The Financial Crimes Enforcement Network assessed a US$1.2 billion penalty for the bank's failure to mitigate and report priority national security risks.[2] The Office of the Comptroller of the Currency separately assessed a US$750 million civil money penalty for Bank Secrecy Act violations; Treasury put the combined penalties at more than US$1.21 billion.[3] The Office of Foreign Assets Control announced a further US$11,662,930 settlement for apparent violations of multiple sanctions programmes.[4]
What the bank admitted
Bank of America admitted wilfully violating the Bank Secrecy Act by failing to implement and maintain an anti-money-laundering programme, conduct due diligence on correspondent accounts, and file Suspicious Activity Reports.[2] The bank failed to timely report over US$5 billion in suspicious transactions, with more than US$1 billion of that activity implicating national security risks including Chinese money-laundering networks, fraud and potential trade-based money laundering linked to the south-west border.[1]
Treasury Secretary Scott Bessent said financial institutions were on the front lines of protecting economic and national security. "Financial institutions are on the front lines of protecting our economic and national security. 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 U.S. financial system to significant illicit finance risks," Bessent said. "Today's actions send a clear message that even the biggest financial institutions are not above the law."[1]
Comptroller of the Currency Jonathan V. Gould said the bank's compliance programme reflected widespread breakdowns in internal controls. "Bank of America, N.A., is the second largest bank in the U.S. and the sixth largest in the world. Every year, it processes hundreds of trillions of dollars in transactions across the globe," Gould said. "Despite its obligation to the American people as a national-chartered, global systemically important bank, the bank's BSA/AML compliance program continues to reflect widespread breakdowns in internal controls, which threatens U.S. national and economic security."[3]
Financial hit and market reaction
Because Bank of America admitted to wilful violations of the Bank Secrecy Act, the US$1.2 billion charge it will record at its third-quarter results on Wednesday US time is non-tax-deductible. Shares fell around 2 per cent in after-hours trading following the announcement.
The enforcement action landed on the same day JPMorgan Chase reported net income of US$15.3 billion, or US$5.57 a share, against analysts' average estimate of US$5.93 per share, marking JPMorgan's first quarterly earnings miss in nearly three years. Goldman Sachs, Wells Fargo and Citigroup all reported solid results. The US Consumer Price Index for September is due Wednesday morning US time, ahead of Bank of America's earnings release.
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Important
This article contains general financial information only and does not constitute financial advice. It is not a recommendation to buy, sell or hold any financial product. Investors should seek professional financial advice tailored to their personal circumstances before making investment decisions.
