- Key insight: The second-largest U.S. bank warned that it may be forced to pay monetary penalties as part of a resolution with regulators regarding anti-money-laundering programs.
- What's at stake: The disclosure marks a change in the bank's outlook. In February, it said it did not believe the problems identified by regulators would have a "material adverse financial impact."
- Forward look: The heads-up about potentially facing penalties could mean that a resolution between the bank and its regulators is forthcoming, one analyst suggested.
Bank of America may have to pay monetary penalties to resolve a regulatory consent order regarding the bank's anti-money-laundering programs.
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The second-largest U.S. bank made the disclosure Friday in a securities filing, and warned that in addition to penalties, it may face "other remedial actions." The update marks a change in outlook from February, when BofA said it did not believe that issues tied to its anti-money-laundering compliance programs would wind up having a "material adverse financial impact" on the bank.
The BofA matter is one of several AML compliance problems involving banks in recent years — and a reminder to other banks that they can still find themselves in regulators' crosshairs, despite the reduced use of enforcement actions during the second Trump administration.
In Bank of America's case, it's unclear how much any penalties could cost the company or when they would be paid. A bank spokesperson did not immediately respond Monday to a request for more details.
The disclosure could be a sign that the $3.5 trillion-asset bank is moving toward a resolution with the Office of the Comptroller of the Currency, according to one analyst.
The OCC issued a cease-and-desist order against the bank in December 2024, accusing it of not complying with the Bank Secrecy Act and calling out violations such as inadequate internal controls, poor governance and deficient independent testing that led to systemic lapses in transaction monitoring and suspicious activity reporting.
"We believe the updated disclosure reflects [Bank of America] working on closing out the matter," Gerard Cassidy, an analyst at RBC Capital Markets, wrote Friday in a research note.
The Charlotte, North Carolina-based bank first revealed nearly two years ago that it was in discussions with regulators over certain deficiencies in its anti-money-laundering and economic sanctions compliance programs. While the bank has neither admitted nor denied the OCC's findings, it has said that it's been working since late 2023 to make changes.
As part of the 2024 consent order, Bank of America was required to revamp its anti-money-laundering protocol, hire a third-party consultant to assess its program and complete a compliance program assessment.
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The bank was also required to employ a Bank Secrecy Act officer, as well as develop and implement an employee training program focused on the Bank Secrecy Act and sanctions compliance. The 20-month-old order did not include any monetary penalty.
In June, the Securities and Exchange Commission hit Bank of America's investment subsidiary, Merrill Lynch, with a $7.5 million fine for allegedly failing to report suspicious activities. Merrill, which BofA acquired amid the 2008 financial crisis, found itself in hot water after using its parent company's anti-money-laundering program.
Merrill neither admitted nor denied wrongdoing as part of its agreement to pay the civil penalty.
Bank of America is among the list of banks whose anti-money-laundering programs have been recently scrutinized by regulators. In the fall of 2024, the OCC flagged deficiencies at Wells Fargo and ordered it to take corrective measures to make sure it reports suspicious activity.
Around the same time, TD Bank faced historic anti-money-laundering noncompliance penalties after the government accused it of facilitating drug trafficking-related money laundering. Along with a requirement to pay more than $3 billion in fines, TD was also hit with an asset cap of roughly $434 billion, a threshold it cannot exceed until its compliance programs improve.
