The U.S. Treasury Department has imposed a significant penalty on Bank of America, fining the institution $1.2 billion for failing to report billions in suspicious transactions. This enforcement action stands as one of the largest in the history of the U.S. Treasury.
The penalty, announced by the Financial Crimes Enforcement Network (FinCEN), is the third-largest in the agency’s recorded history. Only penalties against Binance and TD Bank have surpassed it. Treasury Secretary Scott Bessent emphasized the broader impact of Bank of America’s compliance failures, underlining their implications for economic and national security.
Financial institutions are vital to the protection of our economic and national security,” Bessent stated. “Neglect in meeting anti-money-laundering and sanctions obligations exposes the financial system to immense risks.
FinCEN revealed that Bank of America neglected to report over $5 billion in suspicious transactions, some tied to money laundering networks. The failure to comply with the Bank Secrecy Act, a law mandating safeguards against money laundering, was a central concern.
The Treasury Department also took action with an $11.6 million settlement related to sanctions violations involving Iran and Russia. Additionally, the Office of the Comptroller of the Currency imposed a $750 million penalty, credited against the FinCEN penalty.
Comparison to Other Banking Penalties
The $1.2 billion penalty stands out among anti-money-laundering cases but pales in comparison to broader settlements involving financial misconduct, such as mortgage fraud. Examples include:
- **Bank of America:** $16.65 billion (2014) for mortgage securities before the 2008 crisis, with $7 billion in consumer relief.
- **JPMorgan Chase:** $13 billion (2013) for misleading investors on mortgage-backed securities, including $4 billion in relief.
- **BNP Paribas:** $8.9 billion (2014) for sanctions violations involving Sudan, Iran, and Cuba.
- **Deutsche Bank:** $7.2 billion (2017) for misconduct with residential mortgage securities.
- **Citigroup:** $7 billion (2014) for misleading investors on mortgage-backed securities quality.
These settlements encompassed various forms of misconduct beyond single regulatory fines.
Ranking Among Treasury Penalties
In terms of FinCEN actions, Bank of America’s penalty is third, following Binance’s $3.4 billion penalty and TD Bank’s $1.3 billion penalty.
The TD Bank case involved significant failures to monitor transactions, contributing to substantial illicit finance activity.
In contrast, Bank of America’s penalty does not involve a Justice Department criminal case like the preceding examples.
Reaction and Future Implications
Bank of America acknowledges its compliance shortcomings. The institution claims investments in technology and personnel enhancements to bolster its financial-crime controls.
This penalty reflects scrutiny on banks’ roles in identifying suspicious activity to protect the U.S. financial system. Bank of America will face ongoing oversight, requiring corrective measures and independent assessments of its compliance programs.
The settlement illustrates the severity of penalties possible for failing legal obligations, amid questions on the deterrent effect of such fines on major financial institutions.
Contacting Newsweek editors Matthew Robinson and James Debens, inquiries continue regarding the situation.