Volkswacht Bodensee - US fines Bank of America $1.2 bn for anti-money laundering violations

The second biggest US bank failed to properly report more than $5 billion in "suspicious transactions," the department said.

Some of these involved risks related to national security and other concerns, including transactions "indicative of Chinese money laundering networks" and illicit finance around the southwest US border.

The overall charge involves $1.2 billion assessed by the Treasury Department's Financial Crimes Enforcement Network. This includes a $750 million civil penalty from a key bank regulator, the Office of the Comptroller of the Currency (OCC).

The Treasury's Office of Foreign Assets Control also announced a $11.6 million settlement with the bank over "apparent violations of numerous sanctions programs, including on Iran, Russia, narcotics, and global terrorism."

"Today's actions send a clear message that even the biggest financial institutions are not above the law," said US Treasury Secretary Scott Bessent in a statement.

"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," he said.

The announcement marks a hit to Bank of America just a day before it reports its third-quarter earnings.

A Bank of America spokesperson told AFP its results would include a $1.2 billion charge weighing on net income by around 17 cents per share.

They added that the institution is committed to finishing the work needed to address issues that regulators raised.

"We will continue to support federal and local law enforcement across thousands of investigations and report hundreds of thousands of suspicious activity reports each year," the spokesperson said.

US regulators have published a consent order requiring Bank of America to work with a third party to identify and report suspicious transactions that went undetected.

The institution will also have to undergo an independent review of its programs for monitoring suspicious activity, and on other forms of due diligence.

The bank is subject to a December 2024 cease-and-desist order as well, calling for it to address issues in its anti-money laundering program and compliance with the Bank Secrecy Act.

But the Treasury noted Tuesday that the bank "failed to prioritize" compliance despite agreeing to the 2024 order.

Due to Bank of America's "egregious and continued" violations of the Bank Secrecy Act, the OCC imposed its biggest civil money penalty assessed against a bank, said Comptroller of the Currency Jonathan Gould.

Bank of America shares were down 2.6 percent in after-hours trading, following the Treasury's announcement.

U.Maertens--VB