Bank of America Fined $1.2 Billion by US Treasury for Willfully Violating Anti-Money Laundering Rules and Failing to Report Over $5 Billion in Suspicious Activity
Bank of America has been fined $1.2 billion (approximately £910 million) by the US Treasury Department after admitting it willfully violated the Bank Secrecy Act by failing to maintain a compliant anti-money laundering (AML) programme, conduct required due diligence on foreign correspondent accounts, and file suspicious activity reports (SARs). The announcement came on Tuesday, 13 October 2026. The bank failed to report more than $5 billion in suspicious activity, of which $1 billion was assessed as posing national security and illicit finance risks. Failures included not flagging transactions potentially linked to Chinese money laundering networks and trade-based laundering with a connection to the southwest US border. The $1.2 billion fine was assessed by the Treasury's Financial Crimes Enforcement Network (FinCEN), which credited a $750 million civil money penalty from the Office of the Comptroller of the Currency (OCC), described as the largest penalty the OCC has ever levied. A separate settlement with the Office of Foreign Assets Control (OFAC), relating to 475 apparent violations of sanctions programmes covering Russia, Iran, narcotics, and global terrorism, added $11.6 million, bringing the combined total of the three actions to more than $1.21 billion. OFAC's settlement reflected a finding that the apparent violations were categorised as non-egregious. The Treasury Department described the fine as the third-largest the department has ever imposed. The bank acknowledged it had effectively outsourced a substantial portion of its detection and reporting obligations to third parties rather than maintaining adequate internal controls. Bank of America confirmed the $1.2 billion charge will appear in its third-quarter earnings results.
Why this matters
This penalty is among the largest AML enforcement actions in US Treasury history and sends a clear message that systemic over-reliance on external triggers, rather than proactive internal controls, will attract the severest regulatory consequences. The finding that Bank of America 'effectively outsourced' its AML obligations is significant: it confirms regulators expect banks to maintain autonomous, risk-calibrated internal surveillance rather than passively waiting for law enforcement referrals. For UK and European banks operating in the US, the case reinforces that multi-jurisdictional AML frameworks require active investment rather than procedural tick-boxes. The sanctions component, covering Russia, Iran, and global terrorism programmes, carries specific relevance for correspondent banking relationships with any counterparties in sanctioned jurisdictions.
On the Ground
While this is a US enforcement action with no named UK or City firm involvement, it is directly relevant to UK banking and financial regulation practice because the AML and sanctions compliance frameworks enforced here have direct analogues in the UK regime overseen by the FCA and HM Treasury. UK-qualified financial regulation lawyers advise banks on AML programme design, SAR filing obligations, and OFAC/OFSI (Office of Financial Sanctions Implementation) compliance. The case generates demand for gap analysis work: banks will commission external counsel to benchmark their internal controls against the failures identified. A trainee would assist by preparing compliance gap analysis memos, updating regulatory notification drafts, and summarising the decision's implications in a client briefing note.
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“What does the Bank of America AML fine tell us about regulatory expectations for internal controls at large financial institutions, and how would you advise a bank client reviewing its own programme?”
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