US Treasury announces about $1.2 billion in penalties against Bank of America

The US Treasury Department announced on Tuesday penalties of about $1.2 billion against Bank of America. The Treasury said the bank failed to comply with anti-money laundering and sanctions laws. Bank of America is the second-largest bank in the United States. According to the Treasury, the penalty is the third-largest in the department's history.

The Treasury said the bank failed to report more than $5 billion in suspicious transactions to the government. It said the failures involved risks including Chinese money laundering networks and illicit finance linked to the US southwest border. The Treasury also said the bank "effectively outsourced to third parties a substantial portion of its proactive detection and reporting obligations".

The Office of the Comptroller of the Currency (OCC) assessed a $750 million fine, the largest in its history. The Office of Foreign Assets Control (OFAC) reached an $11.6 million settlement with the bank over 475 apparent violations of sanctions programmes. These include programmes on Russia, Iran, narcotics and global terrorism.

According to the BBC, the Treasury said Bank of America admitted as part of the settlement that it "willfully violated" the Bank Secrecy Act. The BBC also reported that, according to the Treasury, $1 billion of the unreported activity posed national security and illicit finance risks. The reports reviewed by Vocemundi do not include a Bank of America response specifically addressing the reported admission.

According to the BBC, the bank said its third-quarter results will include a non-tax-deductible charge of $1.2 billion, reducing net income by about 17 cents per share. The announcement came less than 24 hours before the bank was due to report quarterly earnings on Wednesday morning, the BBC reported.

What is disputed

Outlets describe the total differently. The BBC reported that the $1.2 billion included both the OCC and OFAC penalties. According to Al Jazeera, the Treasury said the Financial Crimes Enforcement Network (FinCEN) assessed the $1.2 billion penalty with credit for the OCC fine, while the OFAC settlement was announced separately, putting total penalties above $1.21 billion. Reuters put the total at $1.21 billion. The BBC and SCMP describe the overall fine as the third-largest in the department's history. Al Jazeera says the fines include the third-largest penalty.

What each side says

The BBC quoted Treasury Secretary Scott Bessent as saying: "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." SCMP quoted him as saying: "Today’s actions send a clear message that even the biggest financial institutions are not above the law."

Bank of America told the BBC: "Our team is far along with and committed to completing the work required to address the issues raised by our regulators." In a statement quoted by Al Jazeera, the bank said: "Financial crime compliance is serious, and we are responsible for getting it right." According to the BBC, the bank said remediation costs are already in its current expense base. According to the BBC, OFAC described the apparent sanctions violations as "non-egregious".

Analysis

The case places attention on how large banks divide compliance work between internal controls and outside parties; the Treasury said the bank relied too heavily on outside inquiries and "effectively outsourced" much of its detection and reporting obligations. The bank's reported admission of willful violation could matter for how regulators and investors assess its remediation, though the reports reviewed by Vocemundi do not say whether any individuals face charges. The quarterly results may show how markets weigh the one-off charge. Questions remain about the exact composition of the total and the period covered, which the full enforcement documents could clarify. Neither the regulators' view nor the bank's account can be independently assessed from these reports alone.

Produced by the Vocemundi newsroom with AI assistance.