Bank of America shares slide after fine: It failed to report over $5 billion in suspicious activity

The Bank of America has been fined $1.21 billion by U.S. regulators over widespread failures to detect and report potential money laundering and other illicit financial activity. The U.S. Treasury Department said that the bank failed to report more than $5 billion in suspicious transactions, including around $1 billion linked to national security concerns and other priority risks. The penalty ranks as the third largest in the Treasury Department's history. Treasury Secretary Scott Bessent said that financial institutions play a critical role in protecting economic and national security, warning that compliance failures at a bank of this size can expose the wider financial system to illicit finance risks. The penalty includes a record $750 million civil fine imposed by the Office of the Comptroller of Currency. The regulator said Bank of America's anti-money laundering program was deficient and ineffective with weaknesses in its transaction monitoring system, delaying the filing of suspicious activity reports involving billions of dollars. The shortcomings had previously been identified under a 2024 cease and desist order. Regulators also criticized the bank for prioritizing revenue while relying too heavily on external inquiries rather than its own internal controls to identify suspicious activity. The bank paid an $11.6 million penalty to the Office of Foreign Assets Control for more than 400 apparent sanctions violations involving payments that breached U.S. sanctions programs targeting countries including Russia and Iran. The bank has been directed to appoint an independent third party to review past transactions, identify missed suspicious activity and report it to the Financial Crimes Enforcement Network. The financial penalties expected to weigh on Bank of America's third quarter results, with the bank confirming a non-tax deductible charge of approximately $1.2 billion. The bank's share fell 2.7% and after hours trading, after closing the regular session, down 1.1%. Now, regulators have not imposed an asset cap, meaning the bank has not been directly restricted from expanding its balance sheet. The action comes days after American Express was fined $350 million over similar anti-money laundering shortcomings, adding to the scrutiny of financial crime controls across the U.S. banking sector.