New York, Oct 13 (V7N)- Bank of America has been fined $1.2 billion by US regulators over widespread failures to detect money laundering and other potentially illegal financial activities, Reuters reported on Tuesday.
The US Treasury Department said the bank failed to report more than $5 billion in suspicious financial transactions to the government. Approximately $1 billion of those transactions involved national security risks and other priority illicit-financing concerns, according to the department. The penalty ranks as the third-largest fine in the Treasury Department’s history.
US Treasury Secretary Scott Bessent said financial institutions play a critical role in protecting the country’s economic and national security.
“When a bank this large fails to comply with its anti-money laundering and sanctions obligations, the consequences are not limited to that institution alone. Rather, the entire US financial system is at greater risk of illicit financing,” Bessent said in a statement.
The Treasury Department alleged that Bank of America prioritised revenue over developing effective compliance systems. It also accused the bank of relying excessively on investigations and information from external parties, including law enforcement agencies and other financial institutions, instead of strengthening its own internal controls.
Under the consent order accompanying the fine, the bank must appoint an independent third party to review past transactions, identify suspicious activity that was previously missed and report the findings to the US Financial Crimes Enforcement Network (FinCEN).
A Bank of America spokesperson said compliance was essential to preventing financial crime and that the bank recognised its responsibility in this area.
The spokesperson added that the bank had invested hundreds of millions of dollars in technology and employed thousands of people to combat financial crime. Work to address the issues identified by regulators had made substantial progress, and the bank remained committed to completing the outstanding measures.
The penalty is expected to affect the bank’s third-quarter financial results, scheduled for release on Wednesday, October 14. According to the spokesperson, the bank will record $1.2 billion in non-tax-deductible charges, reducing quarterly net income by approximately 17 cents per share.
Analysts surveyed by LSEG had forecast consolidated earnings per share of $1.10 on average, excluding such one-time charges.
Bank of America shares fell 1.1 per cent during regular trading on Tuesday and declined a further 2.7 per cent in after-hours trading.
UBS analyst Erica Nazarian said the penalty could add to negative investor sentiment and raise questions about the bank’s ability to manage costs while continuing its share buyback programme, which amounts to about $6 billion per quarter.
“We think the bank’s share price could be relatively worse when the market opens,” Nazarian said, referring to the upcoming financial report.
However, she noted that the penalty did not include restrictions on the size of the bank’s assets. Such measures, if imposed, could limit a financial institution’s ability to expand its business and assets.
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