Bank of America's $1.2 Billion Bill for Compliance It Outsourced

Bank of America's $1.2 Billion Bill for Compliance It Outsourced

Three agencies, one $1.2 billion bill

On Tuesday, October 13, the U.S. Treasury Department announced more than $1.2 billion in penalties against Bank of America, the second-largest U.S. bank, for years of anti-money-laundering and sanctions failures. FinCEN assessed $1.2 billion for failing to mitigate and report priority national security risks. The Office of the Comptroller of the Currency assessed a $750 million civil penalty — the largest in its history — which is credited against FinCEN's assessment rather than stacked on top. OFAC separately reached an $11.6 million settlement over sanctions violations. Bloomberg put the total at more than $1.21 billion. Treasury called it the third-largest penalty in its history.

$5 billion in suspicious transfers never reported

FinCEN found the bank failed to timely report more than $5 billion in suspicious transactions, more than $1 billion of which implicated priority national security and illicit-finance risks: Chinese money-laundering networks, fraud and potential trade-based money laundering with "a substantial nexus" to the southwest border. CNN reported the bank did not respond timely or meaningfully to red flags about suspicious customers, including those tied to narcotics trafficking, even after compliance staff escalated concerns. The OCC said the bank knew for years it was failing to escalate potentially suspicious activity to investigators, and that its BSA officer and staff "lacked sufficient skills and expertise" to run the program.

Washington frames it as 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," Treasury Secretary Scott Bessent said, adding that "even the biggest financial institutions are not above the law." Comptroller of the Currency Jonathan Gould called the violations "egregious and continued," noted the bank handles hundreds of trillions of dollars in transactions a year, and warned banks without effective programs to expect "swift and significant action." Treasury said the bank "prioritized its revenues and minimized the impact on its required compliance resources"; Bloomberg reported regulators concluded it "effectively outsourced" a key part of its compliance work.

A 2024 order the bank failed to honor

Bank of America signed a cease-and-desist order with the OCC in December 2024, committing to fix the same BSA/AML deficiencies. The agency found on Tuesday that it had not. The bank said the resolutions stem from violations cited in that consent order and FinCEN's investigation. Under the FinCEN resolution, the bank admitted it willfully violated the Bank Secrecy Act: failing to maintain a compliant AML program, to conduct due diligence on correspondent accounts for foreign financial institutions, and to file suspicious activity reports.

Sanctions: 475 apparent violations, $11.6 million

OFAC announced an $11,662,930 settlement covering 475 apparent violations of sanctions programs on Russia, Belarus, Iran, Burma, Somalia, narcotics and global terrorism. Reporting on the order described the bank processing payments involving blocked banks, failing to prioritize alerts for customers matching blocked persons by name and date of birth, and not promptly updating watchlists; roughly $14.8 million in transactions between September 2021 and April 2025 should have been stopped.

The fine landed a day before earnings

The penalties were announced less than 24 hours before third-quarter results. Net income fell to $6.9 billion, or 91 cents a share, from $8.3 billion, or $1.04, a year earlier. Excluding the non-tax-deductible $1.2 billion charge, the bank earned $1.08 a share, short of the $1.10 analysts expected. Net interest income rose about 8% to roughly $16.4 billion; revenue of about $30 billion also came in below estimates.

17 cents a share, and an 8% slide

Bank of America said the charge cut net income by about 17 cents a share. The Financial Times reported the stock fell about 8% on the day; Reuters said shares dropped 4.2% in premarket trading. CEO Brian Moynihan told CNBC the penalty had not knocked the bank off plan, pointing to consumer and commercial banking.

Warren calls it a slap on the wrist

Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, called the $1.2 billion "a slap-on-the-wrist fine," saying Bank of America "failed to implement an effective anti-money laundering program for years."

The second big bank fined in a week

On October 8, the OCC and the Federal Reserve fined American Express $350 million over AML deficiencies tied to about $13 billion in suspected trade-based money laundering between 2014 and 2025. AP noted the Bank of America action is the third-largest in Treasury history, behind roughly $4 billion with Binance in 2023 and about $3 billion with TD Bank in 2024.

What comes next

FinCEN's order requires the bank to hire a third party to go back through its records and identify suspicious transactions it never reported, and to submit to independent reviews of its transaction monitoring, customer due diligence, foreign correspondent account programs and the data governance behind them. The OCC's $750 million penalty is paid to the U.S. Treasury. Regulators said other banks with weak programs should expect the same treatment — and the bank's remediation costs keep running.