US Treasury fines Bank of America $1.2 billion

The United States Department of the Treasury on Tuesday imposed several fines totaling more than $1.2 billion on Bank of America for various violations of anti-money laundering and sanctions laws. It is the third highest sanction in history for the second entity in the country and punishes the lack of controls, mechanisms and the entity's decision to delegate its obligations to detect and report suspicious activities to third parties. According to your estimates. The entity failed to timely report to authorities "more than $5 billion in suspicious transactions, of which more than $1 billion involved national security-related and other priority illicit financing risks, including suspicious transactions indicating Chinese money laundering networks, fraud, and potential money laundering."

Bank of America is scheduled to release its third-quarter results before markets open tomorrow morning, and it said it expects those results to include "a non-tax-deductible charge" of $1.2 billion, which will reduce net income by about 17 cents per share. "We have invested billions of dollars in technology and dedicated thousands of employees to combating financial crime, and our team is highly advanced and committed to completing the work necessary to address the issues raised by regulators," the entity said in a statement.

"Financial institutions are on the front lines of protecting our economic and national security. When a bank of this size fails to meet its anti-money laundering and sanctions obligations, the consequences extend far beyond its own facilities, exposing the entire US financial system to significant illicit financing risks," Treasury Secretary Scott Bessent explained in a statement. "The actions taken today send a clear message: not even the largest financial institutions are above the law."

The statement explains that in addition to that fine, coordinated by the Financial Crimes Enforcement Network (FinCEN) "for failing to mitigate and report priority national security risks, including Chinese money laundering networks and illicit finance along the southwest border," the Office of Foreign Assets Control (OFAC) announced an agreement to apply another $11.6 million "for apparent violations of numerous sanctions programs, including Iran, "Russia, narcotics and global terrorism". Finally, the OCC also imposes a civil penalty of $750 million for the "deficient and ineffective BSA/AML (anti-money laundering) compliance program."

The Treasury indicates in its decision that the main deficiencies in the bank's processes have to do "with the processes of identification and notification of suspicious transactions." Faced with these issues, Bank of America "prioritized its revenue and minimized the impact on its compliance resources. The nature and extent of the Bank's reliance on law enforcement investigations, requests from other financial institutions, and other similar interventions, to the detriment of its own automated internal controls to identify potentially suspicious activity, meant that, in practice, the Bank outsourced a substantial portion of its proactive detection and reporting obligations to third parties. Additionally, the Bank allowed suspicious activity to accumulate uninvestigated for long periods of time. periods, which resulted in late reports of little use to the authorities.