BofA fined US$1.2 billion by US government for failing to police suspicious activity

Bank of America has been fined US$1.21 billion (HK$9.44 billion) by the US government for what it called widespread failures to properly police potential money laundering and other illicit activity at the nation's second-largest bank.

The Treasury Department said the fine, the third-largest in department history, is due to the bank's failure to report over US$5 billion in suspicious activity to the government, including US$1 billion in activity that posed national security-related and other priority illicit finance risks.

“Financial institutions are on the front lines of protecting our economic and national security,” said 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."

The Treasury said the bank "prioritized its revenues" in building compliance programs, and overly relied on inquiries from outside parties like law enforcement and other financial institutions instead of its own internal controls.

“Financial crime compliance is serious, and we are responsible for getting it right," said a Bank of America spokesperson in a statement. "We have invested billions of dollars in technology and dedicated thousands of employees to combat financial crime, and our team is far along with and committed to completing the work required to address the issues raised by our regulators."

The spokesperson added that the bank's third-quarter results due for release on Wednesday will include a non-tax-deductible charge of US$1.2 billion, which will reduce quarterly net income by approximately 17 cents per share.

As part of the fine, the Office of the Comptroller of the Currency levied a US$750 million civil penalty against the lender, the largest ever for the regulator, citing failures to address shortcomings in its anti-money laundering programs that were identified as part of a 2024 cease-and-desist order from the watchdog.

The regulator said the bank's compliance program was "deficient and ineffective," and its transaction monitoring system caused the bank to delay in filing suspicious activity reports on billions of dollars of transactions.

In addition, the bank paid an US$11.6 million fine to the Office of Foreign Assets Control for over 400 apparent violations of numerous sanctions programs. The Treasury said the bank mistakenly processed millions of dollars in payments that violated sanctions programs targeting countries including Russia and Iran.

Reuters

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