• Bank of America fined $1.2 billion for failing to report over $5 billion in suspicious transactions.
• The fine is the third-largest ever imposed by the US Treasury for such violations.
• Allegations include failure to detect money laundering linked to China and sanctions violations concerning Russia and Iran.

Bank of America has been fined $1.21 billion for failing to detect and report potential money laundering and sanctions violations, according to the US Treasury Department. This penalty represents the third-largest fine in the department's history and covers more than $5 billion in suspicious activities that the bank failed to report, including $1 billion associated with national security risks stemming from Chinese money laundering networks and trade-based laundering linked to the US southwest border.

The Treasury emphasized that Bank of America's compliance programme was lacking, stating it "effectively outsourced" its obligations related to anti-money laundering and sanctions compliance to third parties rather than relying on its own internal controls. This resulted in significant lapses in detecting suspicious transactions; specifically, the bank did not file timely reports regarding over $5 billion in suspicious transactions, as highlighted by Treasury Secretary Scott Bessent.

In addition to the hefty $1.2 billion penalty, which includes a record $750 million fine from the Office of the Comptroller of the Currency (OCC), the bank has committed to enhancing its compliance measures. The Office of Foreign Assets Control (OFAC) also imposed an $11.6 million penalty associated with 475 apparent violations of various sanctions programs related to Iran, Russia, narcotics, and terrorism. Bank of America's settlement reflects a significant commitment to rectify its compliance issues regarding financial crime prevention.

In response to these failures, Bank of America released a statement expressing its commitment to financial crime compliance, stating it has invested billions in technology and personnel to combat financial crime. The bank's forthcoming quarterly earnings report will reflect a non-tax-deductible charge estimated to impact net income significantly by approximately 17 cents per share.