The US Treasury has fined Bank of America $1.2 billion for alleged violations of anti-money-laundering and sanctions laws. The Financial Crimes Enforcement Network (FinCEN) imposed the penalty on Tuesday 13 October because the bank failed to mitigate and report priority national security risks. Treasury said its combined penalties against the second-largest bank in the United States exceeded $1.21 billion.
FinCEN said the risks included Chinese money laundering networks and illicit finance along the southwest border. The fine is the third-largest in Treasury's history. It includes $750 million that will go to the Office of the Comptroller of the Currency (OCC), the largest fine that agency has imposed, assessed for the bank's deficient and ineffective BSA/AML compliance programme.
MORE THAN $5 BILLION WENT UNREPORTED
According to the resolution, the bank failed to report to FinCEN in a timely manner more than $5 billion in suspicious transactions. About $1 billion of that amount is tied to Chinese money laundering networks, fraud and possible trade-based laundering linked to the US southwest border.
In the FinCEN resolution, Bank of America admitted that it willfully violated the 1970 Bank Secrecy Act, which requires banks to help the government detect and prevent money laundering. Treasury said the bank also failed to maintain an AML programme meeting the act's minimum requirements, to conduct due diligence on correspondent accounts for foreign financial institutions, and to file Suspicious Activity Reports.
SANCTIONS SETTLEMENT AND TREASURY'S MESSAGE
Separately, Bank of America agreed an $11.6 million settlement with Treasury's Office of Foreign Assets Control over apparent violations of numerous sanctions programmes. These include programmes on Iran, Russia, narcotics and global terrorism.
Treasury Secretary Scott Bessent said: "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 U.S. financial system to significant illicit finance risks." He added that the actions "send a clear message that even the biggest financial institutions are not above the law."
LOOKBACK AND INDEPENDENT REVIEW REQUIRED
The consent order requires Bank of America to work with a third party on a lookback. The aim is to identify and report to FinCEN suspicious transactions that went undetected because of the failures cited.
The bank must also undergo an independent review of the effectiveness of its suspicious activity monitoring, customer due diligence and foreign correspondent account due diligence programmes. The review extends to its data governance framework as it relates to information used in its AML programme.
BANK RESPONSE AND MARKET REACTION
Bank of America said in a statement: "Financial crime compliance is serious, and we are responsible for getting it right." It said it has invested billions of dollars in technology and dedicated thousands of employees to combating financial crime. The bank added that its team is far along with, and committed to completing, the work required to address the issues raised by its regulators.
Emilio Romano, president of the Asociación de Bancos de México and chief executive and chairman of Bank of America México, said the institution meets the highest anti-money-laundering standards. Bank of America booked a $1.2 billion charge tied to the regulatory penalty, and its stock slid more than 8%. Its chief financial officer said the environment for deal making remains solid.
Related: Bank of America profit fell as settlement charge offset revenue growth
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