Bank of America Fined $1.2 Billion After Failing to Flag $5 Billion of Potential Cartel Money. Its Stock is Sinking.
Bank of America allegedly failed to properly report more than $5 billion in suspicious financial transactions, including activity potentially connected to Chinese money laundering networks and narcotics trafficking along the U.S.-Mexico border, according to federal regulators who announced a $1.2 billion penalty against the banking giant on Tuesday.
The U.S. Treasury Department said more than $1 billion of the suspicious transactions involved priority illicit finance and “national security risks,” including “potential trade-based money laundering with a substantial nexus to the southwest border.” Regulators did not establish that all the transactions involved criminal proceeds or identify specific Mexican cartels as recipients of the funds. The bank’s stock plummeted on Wednesday, falling almost 7.5% at 11:19 a.m. ET. Its quarterly results were also impacted by the fine.
The enforcement action, among the largest in Treasury history, follows years of deficiencies in Bank of America’s anti-money laundering systems. According to the Financial Crimes Enforcement Network (FinCEN), the bank failed to adequately investigate warning signs involving customers receiving payments from “unknown third parties,” even after concerns were raised about possible illegal activity.
Treasury investigators concluded that Bank of America prioritized revenue while minimizing the resources devoted to compliance. Its internal monitoring systems were so ineffective that the institution frequently depended on law enforcement inquiries and alerts from other financial institutions to identify potentially suspicious transactions.
The Bank of America penalty also comes as Washington expands financial pressure on Mexico-based criminal organizations. On Tuesday, Treasury separately announced sanctions targeting four individuals and 11 entities connected to the Cártel del Noreste, a Mexican criminal organization.
The sanctioned network allegedly used businesses involved in horse racing, construction, transportation and energy to support cartel operations. There is no publicly established connection between those sanctions and Bank of America’s suspicious transactions.
Bank of America’s compliance problems had already drawn regulatory scrutiny. In December 2024, the Office of the Comptroller of the Currency ordered the institution to address deficiencies in its anti-money laundering program. Regulators said the bank subsequently failed to implement meaningful improvements, despite internal testing that identified serious weaknesses.
The OCC imposed a $750 million penalty, the largest in its history, which is credited toward FinCEN’s $1.2 billion assessment rather than added to it. Treasury also announced a separate $11.6 million sanctions settlement involving apparent violations related to Iran, Russia, narcotics, and global terrorism.
Under the new enforcement order, Bank of America must work with an independent third party to review previously undetected suspicious transactions and assess its compliance systems. The review will specifically examine risks involving the U.S.-Mexico border, cartels and potential narcotics trafficking, as well as Iran and Russia. Bank of America admitted to willful violations of the Bank Secrecy Act as part of its FinCEN resolution.
