US Treasury hits Bank of America with over $1.2 billion in penalties over suspicious transactions and Chinese money-laundering links

The US Treasury Department on Tuesday (Oct 13) announced penalties exceeding $1.2 billion against Bank of America, accusing the lender of violating anti-money laundering and sanctions laws, including failing to report more than $5 billion in suspicious transactions. The department said some of the transactions raised national security concerns, including activity allegedly linked to Chinese money laundering networks and illicit finance along the US-Mexico border. Bank of America shares fell 2.6 per cent in after-hours trading following the announcement.

The penalties include $1.2 billion assessed by the Treasury’s Financial Crimes Enforcement Network (FinCEN), alongside a $750 million civil penalty imposed by the Office of the Comptroller of the Currency (OCC), one of the bank’s key regulators.

Separately, the Treasury’s Office of Foreign Assets Control (OFAC) announced an $11.6 million settlement over what it described as apparent violations of multiple sanctions programmes covering Iran, Russia, narcotics and global terrorism.

“Today’s actions send a clear message that even the biggest financial institutions are not above the law,” US Treasury Secretary Scott Bessent said. He added that failures by a major bank to meet its anti-money laundering and sanctions obligations could expose the wider US financial system to significant risks from illicit finance.

Bank of America faces fresh compliance scrutiny

The announcement comes a day before Bank of America is scheduled to report its third-quarter earnings, putting the regulatory action in focus for investors.

A bank spokesperson told AFP that the results would include a $1.2 billion charge, reducing net income by around 17 cents per share. The spokesperson said the institution remained committed to addressing concerns raised by regulators. “We will continue to support federal and local law enforcement across thousands of investigations and report hundreds of thousands of suspicious activity reports each year,” the spokesperson said.

US regulators have also issued a consent order requiring the bank to work with a third party to identify and report suspicious transactions that had previously gone undetected. The institution must undergo an independent review of its suspicious-activity monitoring systems and other due-diligence procedures.

Regulators cite earlier order and continued violations

Bank of America was already subject to a December 2024 cease-and-desist order directing it to address deficiencies in its anti-money laundering programme and compliance with the Bank Secrecy Act. The Treasury said the bank failed to give compliance the required priority despite agreeing to the earlier order.

OCC Comptroller Jonathan Gould described the violations as “egregious and continued” and said the $750 million civil penalty was the largest the regulator had imposed on a bank.