The US Treasury Department announced a $1.2 bn fine against Bank of America for shortcomings in detecting and reporting potential money‑laundering and other illegal activity.

Treasury officials said the bank did not file reports on over $5 bn of suspicious activity, with roughly $1 bn identified as posing national‑security and illicit‑finance risks.

The regulator highlighted that the bank failed to flag transactions that may have involved Chinese money‑laundering networks or trade‑based schemes linked to the US southwest border.

In the settlement, Bank of America acknowledged willful violations of the Bank Secrecy Act, citing deficiencies in its anti‑money‑laundering programme, due‑diligence on foreign correspondent accounts and filing of suspicious activity reports.

The total penalty combines sanctions from the Office of the Comptroller of the Currency and the Office of Foreign Assets Control, with the OCC portion representing its largest ever fine.

OFAC’s share relates to 475 alleged sanctions breaches covering Russia, Iran, narcotics trafficking and global terrorism, though the agency classified the violations as non‑egregious and set an $11.6 m fine for that component.

Bank of America said the fine will be recorded as a non‑tax‑deductible charge, reducing its third‑quarter net income by about 17 cents per share, and that remediation costs are already reflected in its expense base.

Treasury Secretary Scott Bessent warned that a bank of this size failing its anti‑money‑laundering and sanctions duties threatens the broader US financial system.

The department also criticized the bank for relying heavily on external inquiries from law‑enforcement and other financial institutions rather than its own internal controls, effectively outsourcing a substantial portion of its detection and reporting responsibilities.