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Regulators had already been on high alert. After they required Bank of America to adjust a key compliance system to identify more suspicious transactions, the bank discovered thousands of suspicious payment transactions involving a total value of $4 billion. Bank of America failed to timely report potential money laundering activity involving a scrap vehicle auction company. The team responsible for investigating suspicious activity was overwhelmed, with a backlog of cases once approaching 200,000. Two years after regulators first criticized the bank for system deficiencies, officials still saw insufficient progress in remediation. These long-standing problems ultimately led to Bank of America being fined $1.21 billion this week for violating anti-money laundering and sanctions regulations—the largest penalty ever issued by the Office of the Comptroller of the Currency (OCC) and the third-largest fine in U.S. Treasury Department history. Less than 15 hours after the announcement, Bank of America released its earnings report, and the related fines weighed on its performance.
Bad news kept piling up for Brian Moynihan. The trading division, which had profited handsomely earlier this year from severe market volatility, failed to meet quarterly expectations. A bond portfolio that had previously frustrated investors saw its paper losses once again exceed $100 billion. Bank of America's stock performance over the past five years has ranked last among the six largest U.S. banks, and the latest series of setbacks caused its shares to record the largest earnings-day decline in over a decade. CEO Brian Moynihan, who has led the bank for nearly 20 years, now faces even greater pressure. Bank of America shares plunged 8%, wiping out approximately $30 billion in market value. Moynihan attempted to downplay market concerns during a conference call with analysts. "We have agreed to resolve this matter through a settlement and move forward," Moynihan said Wednesday. "I believe we understand what regulators are asking of us, and we are now deeply advancing our remediation efforts."
Accumulated compliance failures
The core of regulatory concern is Bank of America's Event Processor system, designed in 2010 primarily to monitor transactions across its vast network and identify potential suspicious activity. Over the years, this system has been plagued by problems. The suspicious activity trigger threshold set by Bank of America was deemed too high. After regulators required the bank to re-examine past transactions using a new, lower threshold, employees discovered that had the new standard been applied earlier, the bank should have filed nearly 8,900 additional suspicious activity reports. OCC examiners also found other issues, including that Bank of America lacked sufficient personnel to review suspicious activity. By 2024, the backlog of cases requiring investigator review once approached 200,000. Additionally, for years, Bank of America had allowed customers to conduct wire transfers containing incorrect remitter names. The OCC stated that over nearly three years through October 2024, Bank of America processed 33,000 wire transfers with inaccurate information, "potentially undermining law enforcement's ability to determine the identity of remitters."
The Treasury Department's Financial Crimes Enforcement Network (FinCEN) focused its concerns on three customers, referred to as Customer A, B, and C. According to FinCEN, Customer A operated an online trading platform connecting sellers of U.S. scrap vehicles with domestic and overseas buyers. Customer B was a publicly listed company engaged in a similar business. Customer C was a vehicle export enterprise with business relationships with both Customer A and B. For years, compliance personnel continuously expressed concerns about these three customers. According to a FinCEN document, one employee described Customer A as involving "an absurdly high number of cases/investigations," while another employee noted that the account had been scrutinized by at least five different federal agencies. At one point, compliance personnel prepared materials attempting to persuade executives to terminate the business relationship with Customer A. They noted at the time that Customer A had triggered over 125 anti-money laundering investigations, about 90% of which were related to fraud. However, the account manager responsible for Customer A argued that this was a heavyweight client generating $6 million in annual revenue for the bank. As of 2025, Customer A was still processing third-party payments through Bank of America. The Treasury Department stated in its declaration: "Bank of America prioritized revenue and downplayed the impact of these issues on necessary compliance resources." Bank of America said Tuesday that it has invested billions of dollars in technology and assigned thousands of employees to combat financial crime.
Rare criticism
U.S. Treasury Secretary Bessent made a rare public criticism of Bank of America, stating that "the enforcement action sends a clear message that even the largest financial institutions are not above the law." The problems also extended to the sanctions area. Bank of America reached a settlement with the Treasury Department's Office of Foreign Assets Control over alleged violations of sanctions against countries including Iran and Russia. Bank of America is not the only financial institution facing anti-money laundering issues. Last week, federal regulators fined American Express $350 million for failing to detect and report money laundering activity in its systems. Moynihan stated: "Management's current focus is to fully resolve these issues. Beyond that, there is not much else to discuss."
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