Key takeaways:
- Bank of America faces more than $1.21 billion in total penalties.
- A $1.2 billion FinCEN fine accounts for most of the total.
- The bank expects a $1.2 billion charge to reduce quarterly earnings.
Bank of America faces more than $1.21 billion in penalties announced on Tuesday, following regulatory findings on its financial monitoring systems. The total Bank of America penalty includes a $1.2 billion penalty from the Financial Crimes Enforcement Network (FinCEN), a $750 million penalty from the Office of the Comptroller of the Currency (OCC), and an $11.6 million sanctions settlement.
Breakdown of Bank of America’s $1.21 billion penalties
FinCEN imposed a $1.2 billion penalty, making it the third-largest fine in the US Treasury Department’s history. The OCC separately imposed a $750 million penalty, the largest in its history. However, the OCC penalty will be credited against FinCEN’s assessment rather than added to it.
A separate $11.6 million settlement with the Treasury Department’s Office of Foreign Assets Control brings the total penalties to more than $1.21 billion. The settlement covers 475 apparent violations of sanctions programs involving Russia, Iran, and other countries and activities.
The FinCEN penalty ranks below the $3.4 billion fine imposed on cryptocurrency exchange Binance in 2023 and the $1.3 billion penalty imposed on TD Bank in 2024.
The Bank of America penalty follows findings that the bank failed to monitor trillions of dollars in transactions effectively and did not report more than $5 billion in suspicious activity. The transactions included potential links to money laundering networks, drug trafficking, and fraud.
Regulators also identified weaknesses in transaction monitoring, customer due diligence, and internal oversight. The latest actions follow a December 2024 order that required the bank to address weaknesses in its anti-money laundering controls.
Impact on quarterly earnings and compliance costs
Bank of America said it would record a non-tax-deductible charge of $1.2 billion in its third-quarter results. The bank expects the charge to reduce net income by approximately $0.17 per share.
The bank’s shares fell more than 2% in after-hours trading on Tuesday, ahead of its third-quarter earnings announcement on Wednesday morning.
Bank of America said it had invested billions of dollars in technology and assigned thousands of employees to financial crime prevention. It also said it was working to address the deficiencies identified by regulators.
The enforcement actions require the bank to review previously undetected suspicious transactions with an outside party. It must also undergo independent assessments of its compliance controls.
The Bank of America penalty represents a substantial expense for the bank, with the $1.2 billion charge expected to affect its quarterly earnings directly. The additional settlement and required reviews add to the financial and operational costs associated with addressing the findings.
