Three penalties, one announcement

The US Treasury announced on 13 October that Bank of America, the second-largest bank in the United States, would pay penalties totalling about $1.2 billion for breaches of anti-money laundering and sanctions rules. The department described the package as three fines imposed at the same time. The largest is a $750 million civil penalty set by the Office of the Comptroller of the Currency, while the remainder was imposed by FinCEN, the Treasury's financial crimes network. A separate $11.6 million settlement with the Office of Foreign Assets Control covers alleged violations of several sanctions programmes, including those tied to Iran and Russia. Treasury Secretary Scott Bessent said in a statement:

Financial institutions are on the front lines of protecting our economic and national security.

What the regulators found

The department said the bank did not report more than $5 billion in suspicious transactions to FinCEN within the required deadlines, and that around $1 billion of that activity carried national security and other priority illicit finance risks. Some of the flagged transactions, according to the department, pointed to Chinese money laundering networks and to illicit financing along the south-western border with Mexico. Treasury argued that the bank put revenue first and minimised the effect on spending for compliance, so it leaned on police inquiries, requests from other financial institutions and similar outside prompts instead of its own internal controls. A consent order now requires the bank to hire an independent third party to review past transactions, identify suspicious activity it missed and report it. Treasury also described the penalty as the third-largest in its history.

The bank's response and quarterly results

A bank spokesperson said the company was committed to fixing the problems regulators identified and that the work was well advanced. The spokesperson said:

Financial crime compliance is serious, and we are responsible for getting it right.

The third-quarter results, released on 14 October, show net income of $6.9 billion, or 91 cents a share, for the three months to 30 September, down from $8.3 billion, or $1.04 a share, a year earlier. The bank said the non-tax-deductible $1.2 billion charge would cut earnings per share by roughly 17 cents. Without that charge, adjusted earnings reached $1.08 a share, below the $1.10 consensus compiled by LSEG. Revenue rose 3% to $30 billion and net interest income grew 8% to $16.4 billion, even as trading and dealmaking weakened.

Weaker trading and dealmaking

The pressure came mainly from capital markets, where a prolonged bond sell-off that pushed yields to multi-decade highs around the world hurt activity after a strong first half. Fixed income, currency and commodity trading weighed on results, and the sales and trading line dropped 5% to $5.1 billion. Bond trading revenue fell 17% to $2.55 billion. Investment banking fees dropped 11% to $1.8 billion, worse than the decline of at least 10% that the bank had projected in September, when it said it was not well positioned in some businesses that saw more activity. Dealogic data show Bank of America slipped to fourth place in the global investment banking league table for the first nine months of 2026, from third a year earlier.

Market reaction and next steps

Shares fell 2.7% in after-hours trading after closing the regular session down 1.1%. UBS analyst Erika Najarian said in a note that the penalty would likely add to negative investor sentiment and raise questions about higher expenses and whether the bank can keep up its roughly $6 billion quarterly share buyback pace. A bank spokesperson told AFP that the company would keep supporting authorities in thousands of investigations and file hundreds of thousands of suspicious activity reports each year. The consent order sets the next phase, with the third party's review of past transactions still ahead.