Bank of America Fined $1.2 Billion Over Money-Laundering Violations
The third-largest penalty in Treasury history
Bank of America will pay more than $1.2 billion in federal penalties after admitting it willfully violated the Bank Secrecy Act and failed to timely report more than $5 billion in suspicious transactions, the Treasury Department said Tuesday. The Financial Crimes Enforcement Network assessed the $1.2 billion penalty, the third-largest in Treasury history, while the Office of the Comptroller of the Currency added a $750 million civil money penalty, the largest it has ever imposed, which will be credited toward the FinCEN amount. A separate $11.6 million settlement with the Office of Foreign Assets Control covered apparent sanctions violations tied to Iran, Russia, global terrorism and narcotics, bringing the total to roughly $1.21 billion.
Regulators said more than $1 billion of the unreported activity involved national security risks, including transactions tied to Chinese money-laundering networks and illicit finance along the southwest border. FinCEN found the bank failed to maintain an AML program that satisfied the Bank Secrecy Act, failed to conduct due diligence on correspondent accounts for foreign financial institutions, and failed to file suspicious activity reports on the transactions in time.
Outsourced monitoring and ignored red flags
Treasury said that instead of relying on its own systems, the bank leaned on tips from law enforcement and other banks, which "meant that the Bank effectively outsourced to third parties a substantial portion" of its duty to catch suspicious activity. The OCC said the bank failed to properly monitor trillions of dollars in transactions and "knew for years that it was failing to escalate potentially suspicious activities to investigators for review."
The failures persisted even after a December 2024 cease-and-desist order told the bank to fix its compliance program, and Treasury said the bank prioritized revenue and minimized compliance resources while ignoring red flags its own staff raised about trade-based money laundering and fraud. "Today's actions send a clear message that even the biggest financial institutions are not above the law," said Treasury Secretary Scott Bessent. The settlement requires a third-party review of the missed transactions and independent reviews of the bank's monitoring, and the penalty lands as a $1.2 billion non-tax-deductible charge in the bank's third quarter. No asset cap was imposed.
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How this could hit the options market
A willful-violation admission of this size puts compliance spending, legal reserves and management credibility in play for the whole money-center group, not just the fined bank. Watch flow in BAC first into its next earnings print, then peers JPM, WFC and C, plus the sector via XLF, for put buying that prices in copycat enforcement or higher compliance costs across the group.
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