The U.S. Treasury announced more than $1.21 billion in penalties against Bank of America on Tuesday for failures in anti-money-laundering controls and sanctions screening. The bank reported third-quarter results on Wednesday morning, in an earnings release it also filed with the SEC.
Treasury called the total the third-largest penalty in its history. The $750 million imposed by the Office of the Comptroller of the Currency is the largest in that agency's history, Treasury said.
Three agencies, three numbers
Treasury listed three actions. The Financial Crimes Enforcement Network, FinCEN, assessed $1.2 billion. The OCC imposed a $750 million civil money penalty for what it called a deficient and ineffective compliance program. The Office of Foreign Assets Control settled for $11.6 million over 475 apparent violations of sanctions programs covering Russia, Belarus, Iran, Burma, Somalia, narcotics and terrorism.
The three do not add to the headline. $1.2 billion plus $11.6 million is about $1.21 billion, which is the total Treasury gave, so the OCC's $750 million is not on top of it. Yahoo Finance reported that the OCC penalty is counted within FinCEN's figure, and the bank's own charge for the penalties was $1.2 billion. Neither Treasury's release nor the bank's spells out how the two are credited against each other.
What the orders say
Treasury said the bank admitted to willfully violating the Bank Secrecy Act. FinCEN's findings, as Treasury described them, are that the bank failed to maintain an anti-money-laundering program meeting minimum requirements, did not conduct due diligence on correspondent accounts for foreign financial institutions, and did not file suspicious activity reports on time for more than $5 billion of transactions. More than $1 billion of that involved national security or other priority risks, including Chinese money laundering networks and illicit finance on the southwest border, Treasury said.
Treasury also said the bank prioritized revenue, relied on law enforcement inquiries and referrals from other institutions rather than its own controls, and let suspicious activity go uninvestigated for long periods. These are Treasury's characterizations. Treasury's release did not include a response from the bank.
The OCC's findings reach back to a December 2024 cease-and-desist order. Treasury said the bank still failed, more than a year later, to escalate potentially suspicious activity, and that a gap in its monitoring let potential trade-based money laundering through. The OCC said the transaction-monitoring system failed to properly monitor trillions of dollars in transactions.
Secretary Scott Bessent said in the release that "financial institutions are on the front lines of protecting our economic and national security."
The quarter
The bank booked the penalties as a $1.2 billion non-tax-deductible charge, which it said cost 17 cents a share. It earned $6.9 billion, or 91 cents a share, against $8.3 billion, or $1.04, a year earlier. Excluding the charge, it earned $8.1 billion, or $1.08 a share. Revenue, net of interest expense, rose 3 per cent to $30.0 billion, or $30.1 billion on a fully taxable-equivalent basis.
Zacks consensus before the report was $1.12 a share on revenue of $30.62 billion, Yahoo Finance reported. On those figures the bank missed by 4 cents a share even with the charge added back, and by roughly $500 million or more on revenue, by this publication's arithmetic.
The soft spots were on the Wall Street side. Sales and trading revenue fell 5 per cent to $5.1 billion, and investment banking fees fell 11 per cent to $1.8 billion, according to the release. In September, chief executive Brian Moynihan had said investment banking fees would fall at least 10 per cent from a year earlier, Yahoo Finance reported, so that part was flagged. Moynihan's statement in the release does not mention the penalty; it says the team "delivered organic growth, deepening client relationships and adding new ones."
The shares closed Tuesday at $53.96 and fell 2.29 per cent after hours to $52.73 once the penalty was public, Yahoo Finance reported.
>>The bank missed even with the charge added back.
What to watch
The cash cost is known. The operating cost is not. FinCEN's consent order requires a third-party lookback to find suspicious transactions that went unreported, Treasury said, plus independent reviews of suspicious-activity monitoring, customer due diligence, foreign correspondent due diligence and data governance, with a focus on the southwest border, cartels, Iran and Russia. The cost of the reviews is not disclosed. The place to look is the bank's quarterly filing, and whether the expense line for compliance moves over the next two quarters.
The more immediate test is Wednesday's call with analysts, scheduled for 8:30 a.m. Eastern, where the bank is likely to be asked whether the penalty closes the matter or whether other agencies have open inquiries. That is our expectation, not anything the bank has said.
Sources
- U.S. Treasury, press release sb0657, 13 October 2026
- Bank of America, third-quarter 2026 earnings release (SEC Form 8-K, Exhibit 99.1)
- Yahoo Finance, Bank of America heads into Q3 earnings
The penalties, agencies, alleged conduct, remediation requirements and Secretary Bessent's quotation come from the U.S. Treasury press release of 13 October 2026. The quarterly results, the $1.2 billion charge and its 17-cent effect, the trading and investment-banking figures, Moynihan's quotation and the call time come from Bank of America's third-quarter earnings release, filed with the SEC as an exhibit to its Form 8-K on 14 October 2026. That the OCC penalty is counted within FinCEN's figure, the Zacks consensus figures, Moynihan's September investment-banking comment and Tuesday's share prices come from a Yahoo Finance preview published before results; neither Treasury's release nor the bank's states how the penalties are credited against each other. Arithmetic on consensus gaps is this publication's. The analysis is our own.
Topics businessBank of AmericaTreasurybank earnings
