The US has imposed sanctions of more than $1.21 billion on Bank of America for violations of anti-money laundering and sanctions regime rules. The measures were announced by the US Treasury Department and include the largest civil penalty ever imposed by the Office of the Comptroller of the Currency.
The Financial Crimes Enforcement Network FinCEN imposed a fine of $1.2 billion, finding that the bank failed to promptly report more than $5 billion in suspicious transactions. More than $1 billion of these transactions were related to national security risks and other priority illicit financial activities.
Among the risks identified are Chinese money laundering networks, fraud and potential money laundering through commercial operations along the US southwest border. According to US authorities, the bank relied excessively on alerts from law enforcement and other financial institutions, rather than detecting suspicious transactions through its own systems.
The FinCEN penalty also includes a separate civil penalty of $750 million imposed by the OCC. This amount is deducted from the $1.2 billion fine and is not re-assessed. The OCC called Bank of America's financial monitoring program "inadequate and ineffective" and said the penalty is the largest in the regulator's history.
475 alleged sanctions violations
The Office of Foreign Assets Control (OFAC) has reached a separate settlement with the bank for $11.6 million for 475 alleged violations of various sanctions programs. These include restrictions against Russia, Belarus, Iran, Myanmar, Somalia, drug trafficking and global terrorism.
US authorities say that Bank of America processed payments through blocked banks, allowed sanctioned individuals to conduct transactions and failed to update sanctions control lists in a timely manner. According to OFAC, millions of dollars in payments were processed in violation of sanctions restrictions.
As part of the settlement with FinCEN, Bank of America admits to willful violations of the Bank Secrecy Act. The bank will have to hire an independent third party to review past transactions, identify unreported suspicious activity and report it to FinCEN.
The bank admitted the violations and promised to make corrections
“When a bank of this size fails to meet its anti-money laundering and sanctions compliance obligations, the consequences go beyond its own operations and create significant risks for the entire U.S. financial system,“ Treasury Secretary Scott Besant said.
Bank of America said financial compliance is a serious responsibility and that the bank has invested billions of dollars in technology and hired thousands of employees to combat financial crimes. The penalty will be recorded as an expense that will reduce third-quarter net income by approximately 17 cents a share.