The US Treasury Department on Tuesday announced more than $1.2 billion in penalties against Bank of America, the second-largest bank in the United States, for allegedly violating anti-money laundering and sanctions laws. Bank of America admitted willfully violating Bank Secrecy Act regulations and failing to timely report more than $5 billion in suspicious transactions, Treasury said. More than $1 billion of the unreported activity involved national security and other high-priority risks, including Chinese money-laundering networks and activity tied to the southwest border.

The Treasury's Office of the Comptroller of the Currency imposed a $750 million civil money penalty against the bank — the largest ever levied by that federal regulatory agency — which counts toward the $1.2 billion total. The $1.2 billion FinCEN penalty is the third-largest in Treasury history. Separately, Treasury's Office of Foreign Assets Control announced an $11.6 million settlement covering 475 apparent violations of sanctions programmes related to Russia, Belarus, Iran, Burma, Somalia, narcotics, and global terrorism.

Treasury Secretary Scott Bessent said in a statement that 'when a bank of this size fails to meet its anti-money laundering and sanctions obligations, the consequences expose the entire US financial system to significant illicit finance risks' [Source: CNN]. Bessent added that 'today's actions send a clear message that even the biggest financial institutions are not above the law' [Source: Axios]. The action was announced less than a day before Bank of America was scheduled to report its third-quarter earnings on Wednesday morning.

Bank of America said in a statement that the penalty resolutions stem from violations cited in a previously reported 2024 Comptroller of the Currency Consent Order and FinCEN's investigation. A spokesperson said the bank 'has invested billions of dollars in technology and dedicated thousands of employees to combat financial crime and is committed to completing the work required to address issues raised by regulators' [Source: CNN]. Regulators noted that the compliance failures persisted even after the bank had been ordered to strengthen its safeguards. The 1970 Bank Secrecy Act requires banks to assist the government in detecting and preventing money laundering.

Sources: CNBC, CNN, Associated Press, Axios, BBC News, The National, Spectrum Local News