Bank of America $1.2bn fine to impact earnings and buybacks
Bank of America has been handed a US$1.2bn penalty by US regulators following widespread failures to identify money laundering and other illicit financial activity.
According to the Treasury, the bank neglected to flag more than US$5bn in suspicious transactions to the US government, of which US$1bn presented national security and financial risks.
Among the failures were transactions potentially tied to Chinese money laundering networks and trade-based laundering that went unreported.
The penalty was announced less than 24 hours before the bank was scheduled to reveal its third-quarter earnings for 2026, which it acknowledges will be significantly affected by the size of the fine.
Bank of America confirmed its third-quarter results "will include a non-tax-deductible charge of US$1.2bn, impacting net income by approximately US$0.17 per share."
The bank added: "We have already dedicated substantial personnel and resources to our ongoing remediation efforts, and those costs are in the current expense base."
- Bank of America was fined US$1.2bn for failing to identify money laundering and illicit financial activity, making it the third-largest fine ever imposed by the US Treasury Department
- The bank failed to report more than US$5bn in suspicious transactions, US$1bn of which posed national security and financial risks
- The fine will reduce Bank of America's Q3 net income by approximately US$0.17 per share
- Shares fell 2.7% in after-hours trading following the announcement, having already closed the regular session 1.1% lower
- The OCC levied a US$750m civil penalty against the bank – the largest in the regulator's history – while the Office of Foreign Assets Control issued a separate US$11.6m fine for more than 400 sanctions violations
Treasury Department demands action
The fine ranks as the third-largest ever imposed by the US Treasury Department. Treasury Secretary Scott Bessent stated: "When a bank of this size fails to meet its anti-money laundering and sanctions obligations, the consequences extend far beyond its own walls."
He adds that failures like this open the entire US financial system to significant illicit finance risks.
As part of the settlement, the US Treasury Department has ordered Bank of America to engage an independent third party to examine historical transactions, identify suspicious activity that went undetected, and report those transactions to the US Financial Crimes Enforcement Network.
Bank of America responded to the settlement by saying the incident is a serious matter and that they "are responsible for getting it right".
"Our team is far along with and committed to completing the work required to address the issues raised by our regulators."
Market reaction and financial consequences
Shares in Bank of America dropped 2.7% in after-hours trading following the fine announcement, after having already closed the regular session 1.1% lower.
UBS analyst Erika Najarian noted the fine was raising concerns among investors over higher expenses and whether the bank could sustain its roughly US$6bn quarterly share buyback programme. She also observed that the penalty stopped short of including an asset cap, which would have restricted the bank's capacity for growth.
The Office of the Comptroller of the Currency (OCC) described the bank's compliance programme as "deficient and ineffective", adding that its transaction monitoring system caused the bank to delay filing suspicious activity reports on billions of dollars of transactions.
Jonathan V. Gould, US Comptroller of the Currency, says: "Bank of America, N.A., is the second largest bank in the U.S. and the sixth largest in the world. Every year, it processes hundreds of trillions of dollars in transactions across the globe.
"The OCC expects all banks to have an effective BSA/AML compliance program. Those that do not can expect swift and significant action from the OCC."
As part of the fine, the OCC levied a US$750m civil penalty against the lender – the largest in the regulator's history. The bank also paid a US$11.6m fine to the Office of Foreign Assets Control for more than 400 violations across multiple sanctions programmes.
The Treasury noted that Bank of America had mistakenly processed millions of dollars in payments that violated sanctions programmes targeting countries including Russia and Iran.
The OCC expects all banks to have an effective BSA/AML compliance program. Those that do not can expect swift and significant action from the OCC."
Bank of America’s key partners:
IBM: Bank of America teamed up with IBM to build the IBM Cloud for Financial Services, ensuring stringent security and compliance.
CEO: Arvind Krishna | Headquarters: Armonk, New York, US
Microsoft: Bank of America collaborates with Microsoft to modernize its cloud infrastructure and establish blockchain trade finance solutions on Microsoft Azure.
CEO: Satya Nadella | Headquarters: Redmond, Washington, US
ServiceNow: Bank of America leverages ServiceNow as a core digital platform partner to optimize its global IT workflows and operational processes.
CEO: Bill McDermott | Headquarters: Santa Clara, California, US
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Jonathan V. Gould
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Rui Meng
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