Treasury imposes $1.2 billion penalty on Bank of America for AML and sanctions violations

The U.S. Treasury Department announced Tuesday that it will levy a penalty exceeding $1.2 billion against Bank of America for violations of anti-money-laundering (AML) and sanctions regulations. The agency said the bank did not adequately mitigate or report “priority national security risks, including Chinese money-laundering networks and illicit finance along the southwest border.”

"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," Treasury Secretary Scott Bessent said in a statement.

"Today's actions send a clear message that even the biggest financial institutions are not above the law," Bessent added.

Bank of America responded that it is cooperating with regulators and has allocated substantial resources to address the issues. A spokesperson said the bank has invested billions in technology and employs thousands to combat financial crime, and it will continue to support law-enforcement investigations and file hundreds of thousands of suspicious activity reports each year.

The penalty will be reflected in the bank's upcoming third-quarter earnings as a non-tax-deductible charge of about $1.2 billion, reducing net income by roughly 17 cents per share. The fine includes a $750 million civil penalty to the Office of the Comptroller of the Currency, the largest OCC penalty on record.

FinCEN officials noted that the bank failed to act on red-flagged customers, including those linked to narcotics trafficking, and did not report more than $5 billion in suspicious activity despite processing over $9 trillion in transactions last year. An internal design flaw in the bank's sanctions-screening filter prevented high-priority alerts when a transaction matched a name and date of birth on the Treasury's sanctions list.

Industry commentator Dennis Kelleher, CEO of Better Markets, called the fine "small compared to Bank of America's revenue" and argued that personal accountability for executives is needed to deter future violations. After the announcement, Bank of America shares fell more than 2.5 % in after-hours trading.

"The OCC and FinCEN are sending a message to BoA and to all banks — if you don’t fix the problem quickly they’ll be a big fine," former Treasury official Aaron Klein said.

The $1.2 billion sanction is the third-largest ever imposed by FinCEN, following a $3.4 billion penalty against Binance in 2023 and a $1.3 billion fine against TD Bank in 2024.