Bank of America Hit With Historic $1.2 Billion Fine for Illicit Finance Failures

The U.S. financial system is the envy of the world. It’s also a major hub for illicit finance. Protecting the former requires confronting the latter, including when the failures occur at the nation’s largest financial institutions. On October 13, the U.S. Treasury Department imposed a historic $1.2 billion penalty on Bank of America, the second-largest bank in the United States and sixth-largest in the world, for longstanding failures to detect and report suspicious financial activity. According to Treasury, the bank failed to report more than $5 billion in suspicious transactions in a timely manner. These included over $1 billion implicating priority national security and illicit finance risks, including issues involving Chinese money laundering networks, fraud, and potential trade-based money laundering along the southwestern border. The bank also processed millions of dollars in payments in apparent violation of U.S. sanctions against Russia, Iran, and other illicit actors. Deficiencies Went Unresolved for Years Despite Internal Warnings Bank of America’s compliance failures persisted despite repeated internal warnings and obvious signs of suspicious financial activity. In one case, a vehicle exporter had a customer profile indicating expected annual sales of $1 million to $4 million. Yet over roughly three years, it processed more than $700 million in wires involving high-risk jurisdictions. Even after terminating that relationship, Treasury determined that the bank failed to reassess the risks posed by related customers. In another case, the bank identified more than 100 anti-money-laundering investigations involving an online vehicle auction company, nearly 90 percent of which were fraud-related. Compliance personnel warned of “money laundering concerns, potentially facilitating transnational crime,” and recommended closing its accounts. The bank’s business managers, however, resisted these calls, describing the customer as a “large and valued client” that generated roughly $6 million annually. The bank instead pursued mitigation measures, failing to adequately address the customer’s continued acceptance of payments from third parties. Treasury’s Enforcement Campaign Extends Beyond U.S. Borders The Bank of America penalty is part of a broader enforcement campaign. In 2025, Treasury cut off Cambodia’s Huione Group from U.S. correspondent banking over laundering linked to North Korean cybercrime and Southeast Asian scams. It also restricted transfers involving three Mexican financial institutions implicated in cartel financing. This month, Treasury proposed prohibiting certain transfers involving the Russia-linked sanctions evasion network known as A7, as well as its overseas intermediaries, which held accounts at roughly 435 financial institutions in at least 83 countries. Treasury also proposed cutting off five Dubai-based branches of Egypt’s state-owned Banque Misr from U.S. dollar correspondent access earlier this year as part of Operation Economic Outcast. These actions underscore the extraordinary reach of American financial enforcement. They also illustrate why protecting the U.S. financial system requires looking beyond America’s borders. Illicit funds frequently move through foreign institutions, intermediaries, and jurisdictions before reaching American banks. Effective enforcement depends not only on policing domestic financial institutions but also on strengthening the capabilities of foreign counterparts. America Cannot Police Global Illicit Finance on a Shoestring Budget For all the illicit finance concerns emanating from the United States, Washington has achieved a great deal on a shoestring budget. Treasury’s Financial Crimes Enforcement Network (FinCEN), which polices against illicit finance in the U.S. financial system, received just $185 million in fiscal year 2026, down $5 million from the previous year. Its workforce totaled 259 full-time equivalents in 2025, fewer than the 275 in 2017 — even as annual Bank Secrecy Act filings have climbed nearly 29 million. Congress should fund FinCEN’s proposed $25 million increase and 42 additional positions for 2027. Policymakers should likewise strengthen Treasury’s Office of Technical Assistance. The latter helps foreign regulators and financial intelligence units combat money laundering, yet its funding fell from $38 million in 2025 to $30 million in 2026. Building partner capacity to identify suspicious flows, exchange intelligence, and interrupt them before they reach American banks is essential. Max Meizlish is a research fellow for the Center on Economic and Financial Power (CEFP) at the Foundation for Defense of Democracies (FDD). For more analysis from Max and FDD, please subscribe HERE. Follow FDD on X @FDD and @FDD_CEFP. Follow Max on X @maxmeizlish. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.