From Chinese money laundering to Russia, Iran sanctions - why was Bank of America fined $1.21 billion?

Bank of America has been fined $1.21 billion by US regulators for failing to detect and report billions of dollars in suspicious transactions, including activity linked to potential money laundering and sanctions violations.The US treasury department said the bank failed to report more than $5 billion in suspicious activity, including $1 billion that posed national security-related and other illicit finance risks. The unreported activity included transactions that may have involved Chinese money laundering networks and trade-based laundering linked to the US southwest border, according to the Treasury.The department said the bank prioritised revenue while building its compliance programmes and relied too heavily on inquiries from law enforcement and other financial institutions rather than its own internal controls. This effectively outsourced a substantial part of its responsibility to proactively detect and report suspicious activity, it said.Violated Bank Secrecy ActAs part of the settlement, Bank of America admitted that it had “willfully violated” the Bank Secrecy Act by failing to maintain a compliant anti-money laundering programme, conduct required due diligence on foreign correspondent accounts and file suspicious activity reports, the Treasury said.The $1.21 billion penalty includes a $750 million civil fine imposed by the Office of the Comptroller of the Currency (OCC), the largest in the regulator’s history. The OCC said the bank had failed to address shortcomings in its anti-money laundering programmes identified in a 2024 cease-and-desist order. It described the bank’s compliance programme as “deficient and ineffective” and said its transaction monitoring system had delayed reports covering billions of dollars in transactions.The bank also agreed to pay $11.6 million to the Office of Foreign Assets Control (OFAC) over 475 apparent violations of sanctions programmes targeting Russia, Iran, narcotics and global terrorism. OFAC said the settlement reflected its determination that the apparent violations were “non-egregious”.Under the settlement, the bank must hire an independent third party to review past transactions, identify suspicious activity it failed to detect and report those transactions to the Financial Crimes Enforcement Network (FinCEN).Bank of America said it had invested billions of dollars in technology and dedicated thousands of employees to fighting financial crime. It added that it was committed to completing the work required by regulators and had already devoted substantial personnel and resources to remediation.The bank said its third-quarter results, due on Wednesday, would include a non-tax-deductible charge of $1.2 billion, reducing net income by approximately 17 cents per share.The penalty comes days after American Express was fined $350 million for similar anti-money laundering shortcomings. Bank of America shares fell 2.7% in after-hours trading on Tuesday, after closing down 1.1%.You use AI every day. Now get your AI Quotient. Take the AIQ test.