Bank of America Faces $1.2 Billion in Regulatory Penalties Over Anti-Money-Laundering Failures

By sterlingashworth // 2026-10-15

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Bank of America (BofA) was fined $1.2 billion for failures in monitoring and reporting suspicious transactions totaling $5 billion. The U.S. Department of the Treasury (USDT) described the action as the third-largest penalty in the department's history, while the USDT's Office of the Comptroller of the Currency (OCC) said its portion is the largest it has ever assessed against a bank ^[1]^[2]. The penalties were announced after the bell and arrived the evening before the bank's third-quarter earnings call ^[3].

Regulators Cite Compliance Failures and Revenue Priority

The USDT said BofA prioritized its revenues and minimized the impact on required compliance resources, relying on law enforcement inquiries and requests by other financial institutions instead of its own internal automated controls ^[3]. It said that the bank allowed suspicious activity to accumulate uninvestigated for extended periods, filed suspicious activity reports late, and failed to account for customers' extensive reliance on payments from unknown third parties ^[3]. According to the department, the bank effectively outsourced to third parties a substantial portion of its proactive detection and reporting obligations ^[3]. The OCC meanwhile said the bank's transaction monitoring failed to properly monitor trillions of dollars in transactions, that the bank knew for years it was failing to escalate potentially suspicious activity, and that its BSA officer and staff lacked sufficient skills and expertise ^[3]. Comptroller Jonathan Gould said: "The second largest bank's egregious and continued BSA violations warrant the OCC imposing its largest [civil money penalty] ever assessed against a bank" ^[3]. The USDT's Office of Foreign Assets and Control (OFAC found 475 apparent sanctions violations, including payments routed through blocked banks and designated individuals allowed to withdraw funds due to poor sanctions alert calibration, and called the violations non-egregious, according to the agency's announcement ^[3].

Prior 2024 Consent Order and Continued Deficiencies

On Dec. 23, 2024, the OCC issued a cease-and-desist order against BofA for Bank Secrecy Act (BSA) and sanctions deficiencies, including a failure to timely file suspicious activity reports and a failure to correct a previously identified deficiency related to its customer due diligence processes, according to the OCC ^[3]. The order described a systemic failure to set proper transaction-monitoring thresholds and came with no fine at the time ^[3]. BofA disclosed in an October 2024 filing that it was in talks with several federal regulators over its BSA, anti-money-laundering (AML) and sanctions compliance programs, including transaction monitoring, training, governance and customer due diligence ^[3]. At the time, the bank said resolution of the discussions could include one or more public orders by the regulators ^[3]. Treasury said that after agreeing to the 2024 order, the bank still failed to prioritize BSA and AML compliance, and that more than a year later it still failed to escalate potentially suspicious activities to investigators for review ^[3]. The contrast between the free 2024 order and Tuesday's bill formed the basis for the penalties, according to the USDT's account ^[3].

Comparison With TD Bank Settlement

TD Bank pleaded guilty in October 2024 to BSA and money-laundering conspiracy charges and agreed to roughly $3 billion in total penalties, including a $1.8 billion criminal resolution and a $450 million OCC penalty, according to the Department of Justice ^[3]. BofA's $1.2 billion settlement is about 40% of TD's total ^[3]. BofA admitted willful BSA violations to the USDT's Financial Crimes Enforcement Network, but no source mentioned criminal charges or a DOJ resolution against the bank ^[3]. Unlike TD, BofA did not receive an asset cap. Instead, it faces a third-party lookback and independent reviews of its monitoring, customer due diligence, and correspondent-banking due diligence, with focus on the southwest border, cartels, Iran, and Russia ^[3]. The OCC's $750 million penalty against BofA exceeds TD's $450 million OCC penalty ^[3].

Financial Impact and Outlook

Against roughly $1.11 consensus EPS, that is about 15 percent of the quarter's expected earnings ^[3]. BAC closed Tuesday at $53.94, down 1.2 percent with a broader bank selloff ^[3]. After the news around 4:09 p.m. ET, shares fell another 2 percent after hours, leaving the stock down about 3.6 percent year-to-date and below its 52-week high of $65.22, according to market data ^[3]. The bank said remediation costs are already reflected in its current expense base, and the charge is expected to be one-time on paper ^[3]. Third-quarter results are due Wednesday before the open, with a call at 8:30 a.m. ET and CEO Brian Moynihan on CNBC at 10:20 a.m.

Skepticism About Centralized Financial Enforcement

The scale of the penalty – more than $1.2 billion against the nation's second-largest bank – reflects a broader pattern in which AML rules function less as consumer protection and more as surveillance infrastructure. The framework has also driven debanking, with banks closing accounts without explanation. As one account of the trend put it, customers "won't even tell you why they are closing your account, and you will probably have trouble opening accounts at other banks" ^[4].

References

Bank of America hit with $1.2 billion penalty over money laundering .... https://www.axios.com/2026/10/13/treasury-bank-america-fine
US Hits Bank of America With $1.2 Billion Fine, Saying It Violated Money Laundering, Sanctions Laws. https://www.ntd.com/us-hits-bank-of-america-with-1-2-billion-fine-saying-it-violated-money-laundering-sanctions-laws_1178708.html
Bank Of America Fined $1.2 Billion For Failing To Report $5 Billion In Suspicious Transactions, Including Chinese Money-Laundering Networks. https://www.zerohedge.com/markets/bank-america-fined-12-billion-failing-report-5-billion-suspicious-transactions-including
De-Banked: It’s Only a Matter of Time Before It Happens to You. https://internationalman.com/articles/de-banked-its-only-a-matter-of-time-before-it-happens-to-you/

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