Bank of America hit with $1.2 billion AML fine a day before earnings

Bank of America’s main‑street earnings report is set to arrive a day after regulators announced a record $1.2 billion fine for money‑laundering and sanctions violations. The penalty, the third‑largest ever imposed by the Treasury Department, covers failures that spanned years and involved more than $5 billion in suspicious activity.

The Treasury Department’s announcement on October 13, 2026 detailed that Bank of America had failed to file Suspicious Activity Reports for more than $5 billion in transactions, including over $1 billion tied to national‑security‑related risks. The agency said the bank had “willfully violated” the Bank Secrecy Act and had “failed to maintain” an anti‑money‑laundering program that met minimum requirements.

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In a coordinated enforcement action, the Treasury’s Financial Crimes Enforcement Network assessed a $1.2 billion penalty, the third‑largest in Treasury history after Binance’s $3.4 billion fine in 2023 and TD Bank’s $1.3 billion penalty in 2024. The OCC added a $750 million civil penalty, the largest ever imposed by the agency, and the Office of Foreign Assets Control settled for $11.6 million over 475 sanctions violations. The total penalty thus exceeds $1.21 billion.

Regulators said the bank’s transaction‑monitoring system lacked appropriate thresholds for triggering investigations, allowing red‑flags to slip through. The OCC’s order noted a “systemic failure” to set thresholds and a lack of “acceptable substantial progress” in correcting earlier customer‑due‑diligence problems. Treasury added that the bank had “failed to conduct due diligence for correspondent accounts for foreign financial institutions” and had “failed to file suspicious activity reports.”

Bank of America’s spokesperson said the organization had “invested billions of dollars in technology” and “dedicated thousands of employees to combat financial crime.” The bank added that the $1.2 billion penalty would be reflected as a non‑tax‑deductible charge in its third‑quarter earnings, which are expected to be released before 7 a.m. Eastern on Wednesday. The bank also confirmed that remediation costs are already included in its current expense base.

Regulators had previously issued a cease‑and‑desist order in December 2024, demanding the bank fix gaps in its due‑diligence process and engage an independent consultant for look‑back reviews. The order cited a “breakdown” in the bank’s systems for detecting and reporting suspicious activity. The bank’s failure to make “acceptable substantial progress” was highlighted in the current enforcement action.

Experts note that the fine places a spotlight on the broader industry. HSBC faced a $1.9 billion penalty in 2012 after allowing $8 billion to move through its accounts for drug cartels and sanctioned regimes. Bank of America’s penalty, while lower, reflects a pattern of repeated failures rather than a single lapse.

For investors, the timing of the fine—announced a day before the earnings release—means the impact will be felt immediately in the financial statements. The bank’s stock moved in after‑hours trading following the announcement, though the exact percentage change is not disclosed here.

Regulators have indicated that Bank of America must conduct a third‑party review of previously undetected suspicious transactions and undergo independent assessments of its transaction‑monitoring, customer due diligence and foreign correspondent due diligence programs. The bank’s compliance program will be under close scrutiny in the next supervisory cycle.

What to watch next:

• Bank of America’s third‑quarter earnings call, scheduled for 8:30 a.m. Eastern on Wednesday, will provide details on the charge’s impact on income and the bank’s remediation strategy.

The enforcement action underscores the Treasury Department’s focus on anti‑money‑laundering compliance for the country’s largest banks. The fine, the third‑largest in Treasury history, reflects a pattern of systemic failures that regulators have identified over multiple supervisory cycles. Bank of America’s next steps will involve extensive remediation and independent reviews.