A recent $1.2 billion penalty against Bank of America highlights crucial weaknesses in handling money laundering and sanctions evasion. This case serves as a critical alert for the financial industry. It’s not solely about the hefty fine, but more fundamentally about the reasons behind it. The bank’s shortcomings in detecting and reporting suspicious activities underscore significant vulnerabilities in the sector’s approach to financial crimes.
Bank of America notably failed to identify and report over a billion dollars of questionable activities linked to national security threats. Additionally, 76% of its risk factor weights in transaction monitoring remained unchanged from 2018 to 2023. Of the weights altered, around 80% were reduced. These findings reveal a disconnect between financial institutions’ methods and the global and national security landscape.
Many financial entities view money laundering and sanctions evasion through a narrow compliance lens, focusing on pattern matches and sanctions lists. Such operational checks are essential for crime prevention programs, but they miss the broader implications. Financial crimes differ in severity; a drug dealer isn’t comparable to someone bypassing sanctions supporting North Korea’s nuclear ambitions. To address this, the sector needs a shift, considering national security, foreign policy, and global dynamics.
For instance, the Iran War emphasizes economic warfare to curb Iran from bypassing sanctions, central to American strategy. Missing Iranian sanction evasions can have severe strategic effects compared to unrelated illicit transactions. When a large bank like Bank of America fails to adapt risk weights over five years, it signals complacency amid global changes. This complacency was particularly evident during Russia’s Ukraine invasion.
Regulations pointed out failures to recalibrate risk weights despite internal evidence. Financial institutions can’t evolve their understanding of crime risks without leaders versed in global changes. This calls for a revamp in financial crime education. Reports from the Association of Certified Anti-Money Laundering Specialists highlight inadequate expertise and training in the private sector. Surveys reveal high risks in insufficient training and geopolitical threats.
There’s recognition of the increasing geopolitical threats and skill gaps needed to tackle them. Professionals must learn how shifts in national security and foreign policy impact crime prevention strategies. Regulatory training is crucial, yet institutions need staff trained beyond compliance lists and monitoring systems. Effective leadership, resources, and continuous education are vital for dynamic risk management.
The private sector should focus on forming thinkers rather than mere workers in financial crime roles. Improvements in operational compliance training won’t suffice. A thorough reconsideration of financial crime education is necessary, ensuring staff combat threats adeptly.
Financial crime is not merely a regulatory hurdle; it’s a global safety issue. Untrained staff can’t counteract threats effectively.
Brett Erickson is the managing principal at Obsidian Risk Advisors and a member of advisory boards at Seton Hall and DePaul University. Copyright 2026 Nexstar Media Inc.