US fines Bank of America $1.2bn over money laundering and sanctions violations

The US Treasury Department has imposed more than $1.21 billion in penalties on Bank of America over failures linked to anti-money-laundering and sanctions compliance. The action affects the second-largest bank in the United States and was announced on Tuesday. Treasury said the case involved shortcomings in suspicious transaction reporting, customer due diligence and sanctions controls.

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According to the department, the Financial Crimes Enforcement Network assessed a $1.2 billion penalty for the bank's failure to mitigate and report priority national security risks, including Chinese money laundering networks and illicit finance along the southwest border. Treasury said the bank failed to timely report more than $5 billion in suspicious transactions. It also said the institution had effectively outsourced a substantial part of its proactive detection and reporting obligations to third parties.

Treasury Secretary Scott Bessent said the consequences of such failures extend beyond the bank itself and can expose the wider US financial system to illicit finance risks. The Office of the Comptroller of the Currency separately imposed a $750 million fine, which it described as the largest in its history, for what it called a deficient and ineffective anti-money-laundering compliance programme. The Financial Crimes Enforcement Network said its penalty included credit for the OCC fine.

The Office of Foreign Assets Control also announced an $11.6 million settlement over apparent violations of sanctions programmes covering Iran, Russia, narcotics and global terrorism. Treasury said Bank of America agreed to settle 475 apparent violations and accepted compliance commitments covering training, testing, audit and future communication with the agency. The combined actions show how US regulators are using multiple enforcement tools against large banks when controls are judged to have failed.

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The case matters because it touches both financial integrity and national security enforcement. US authorities have increasingly focused on banks' ability to detect suspicious flows tied to sanctions evasion, cross-border laundering and other illicit activity. The reference to Chinese money laundering networks and southwest border finance also places the case within broader concerns about transnational criminal networks and the movement of illicit funds through the US banking system.

The penalties add to a long-running pattern of regulatory scrutiny of major financial institutions over anti-money-laundering systems, reporting delays and sanctions screening. Treasury said the bank's failures involved both internal processes and reliance on third parties, which raises questions about oversight in large and complex compliance operations. What remains unclear is how quickly the bank will implement the required changes and whether regulators will take further action if problems persist.

The next point to watch is whether the settlement leads to wider enforcement across the sector or prompts other banks to review similar controls.

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