BBC: Bank of America hit with $1.2bn fine for money laundering failings

• The bank admitted to willfully violating the Bank Secrecy Act and failing to maintain a compliant anti-money laundering programme.
• The penalties include $750m from the OCC, the largest it has ever imposed, and $11.6m from OFAC for 475 apparent sanctions violations.

Bank of America received a $1.2bn fine from the US Treasury Department for failing to detect and report over $5bn in suspicious activity, with $1bn linked to national security and illicit finance risks. The bank admitted to willfully violating the Bank Secrecy Act, failing to maintain a compliant AML programme, conduct due diligence on foreign correspondent accounts, and file suspicious activity reports.

The penalties include $750m from the OCC, its largest ever, and $11.6m from OFAC for 475 apparent sanctions violations involving Russia, Iran, narcotics, and global terrorism. The Treasury criticized the bank for relying on outside inquiries instead of internal controls, effectively outsourcing its detection and reporting obligations.

• $1.2bn total fine imposed
• $5bn unreported suspicious activity
• 475 apparent sanctions violations

• Review internal controls to ensure proactive detection and reporting, not reliance on third-party inquiries, as highlighted in the Bank of America case.
• Assess due diligence procedures for foreign correspondent accounts in light of Bank of America's admitted Bank Secrecy Act violations.
• Evaluate sanctions screening processes to prevent violations similar to the 475 apparent breaches involving Russia, Iran, narcotics, and global terrorism.

This case underscores the critical importance of robust internal AML and sanctions compliance programmes for large financial institutions. Regulatory authorities imposed one of their largest fines ever, highlighting the risks of outsourcing detection and reporting obligations and failing to maintain effective internal controls. Compliance officers must ensure their institutions do not repeat these mistakes, as failures can expose the entire financial system to illicit finance risks and result in severe financial and reputational penalties.