Treasury imposes a $1.2 billion fine on Bank of America: The bank failed to report more than $5 billion in suspicious transactions on time

Bank of America will have to pay $1.2 billion after admitting to serious failures in its mechanisms for detecting money laundering and in complying with sanctions from the United States. The penalty, announced on Tuesday, is one of the most severe ever imposed on a financial institution in the country.

According to the Treasury Department, this is the third-highest fine in the agency's history. Of the total, $750 million will go to the Office of the Comptroller of the Currency (OCC), which had never before imposed a penalty of this magnitude.

The crux of the case lies in what the bank failed to report. According to the Treasury, Bank of America failed to report more than $5 billion in suspicious transactions to the Financial Crimes Enforcement Network (FinCEN) in a timely manner. More than $1 billion of that amount was linked to national security risks and other government priorities regarding illicit financing, such as Chinese money-laundering networks, fraud, and potential money-laundering schemes involving trade with significant connections along the southwest border.

The bank acknowledged that it had deliberately violated the Bank Secrecy Act, according to the Treasury. It also admitted that its anti-money laundering program did not meet the law's minimum requirements and that it failed to file the suspicious activity reports it was required to submit.

In addition, there is an agreement with the Office of Foreign Assets Control (OFAC), which administers the U.S. sanctions system. The Treasury identified 475 apparent violations, involving payments totaling millions of dollars related to sanctions programs against Russia, Belarus, Iran, Myanmar, and Somalia, as well as others targeting drug trafficking and global terrorism.

Treasury Secretary Scott Bessent highlighted the institution's importance within the financial system: "When a bank of this size fails to meet its anti-money laundering and sanctions obligations, the consequences extend far beyond its own walls, exposing the entire U.S. financial system to significant illicit finance risks."

Bank of America's scale explains the concern. It is the country's second-largest bank, with more than 70 million customers, and processes about $4.5 trillion in consumer payments and about $450 trillion in corporate transactions, such as payroll and supplier payments, each year.

In a statement sent to NBC News, the bank said it has invested billions of dollars in technology, assigned thousands of employees to this task, and is making progress on the corrective measures regulators require. "Financial crime compliance is serious, and we are responsible for getting it right," it said.

The bank will report its third-quarter results on Wednesday morning.