Bank of America, the second-largest US bank, failed to promptly report hundreds of millions of dollars in suspicious transactions bearing signs of Chinese money-laundering networks, US regulators said on Tuesday, announcing more than US$1.21 billion in penalties for broader anti-money-laundering and sanctions failures.
The Financial Crimes Enforcement Network, or FinCEN, said the activity included large wire transfers to counterparties in China, repeated credit-card purchases at major retailers and shipping companies, and payments towards cards held by third parties without an apparent commercial purpose.
Most of the suspected network activity involved a group of customers purporting to operate in logistics or electronics, according to a consent order. The agency said their transaction patterns were inconsistent with legitimate commercial activity for those businesses.
The China-related findings form part of a wider enforcement action against the bank. FinCEN imposed a US$1.2 billion penalty, against which it will credit a US$750 million payment to the Office of the Comptroller of the Currency (OCC).
Bank of America admitted the facts and violations set out in the FinCEN order to resolve the case, including wilful failures to comply with the Bank Secrecy Act. The order describes the underlying transactions as suspicious and does not establish that every payment involved criminal proceeds.
“Financial crime compliance is serious, and we are responsible for getting it right,” a Bank of America spokesperson said in response to questions from the South China Morning Post.
The bank said it had invested billions of dollars in technology and dedicated thousands of employees to combating financial crime, adding that its team was “far along with and committed to completing the work required to address the issues raised by our regulators”.
The spokesperson did not directly address questions about the suspected Chinese money-laundering networks or whether the customer relationships involved remained open.
FinCEN said the bank failed to report more than US$5 billion in suspicious activity on time. More than US$1 billion involved national security and other priority illicit-finance risks, a category that includes suspected Chinese laundering networks, fraud and potential trade-based money laundering connected to the US southwest border.
The order did not provide an exact total for the suspected Chinese network activity or identify the customers and counterparties involved.
In response to the SCMP’s questions, the US Treasury Department referred to the consent order.
Warning signs included large transfers to China with generic descriptions such as “for goods”, without a discernible business rationale. FinCEN also identified repeated transfers to counterparties with no web presence operating from residential addresses.
The bank’s credit-card monitoring had gaps, including shortcomings in triggering investigations when spending routinely exceeded a cardholder’s stated income, according to the order.
In January 2024, Bank of America developed a feature to identify potential trade-based money laundering, including credit-card activity. But during the period covered by the order, it used that feature only for activity already under investigation, rather than to generate alerts or trigger new investigations, FinCEN said.
Some suspicious transactions continued after the bank adjusted its monitoring thresholds, the agency added.
The order’s China-related section does not identify a specific cartel or establish that the transactions involved fentanyl proceeds. It also does not allege Chinese government involvement.
The Chinese embassy in Washington had not responded to a request for comment.
In a separate action, the Office of Foreign Assets Control (OFAC) announced a settlement of around US$11.7 million for 475 apparent sanctions violations involving about US$14.8 million in transactions between September 2021 and April 2025.
Those findings concerned sanctions programmes targeting Russia, Belarus, Iran, Myanmar, Somalia, narcotics and global terrorism. OFAC’s release did not identify a connection to the suspected Chinese money-laundering networks described by FinCEN.
The sanctions failures included payments through blocked banks and transactions by individuals whose names and dates of birth exactly matched sanctions records.
Bank of America said its third-quarter results would include a non-tax-deductible charge of US$1.2 billion, reducing net income by around 17 US cents per share.
OFAC classified the case as non-egregious but said the bank’s incomplete disclosures and delayed responses slowed its investigation. It granted no reduction from the base penalty.
Treasury described the combined enforcement action as its third-largest penalty and the OCC’s largest.
“When a bank of this size fails to meet its anti-money-laundering and sanctions obligations, the consequences extend far beyond its own walls,” US Treasury Secretary Scott Bessent said.
The FinCEN settlement requires the bank to engage a third party to review past transactions for suspicious activity that went undetected and to undergo independent reviews of its monitoring and customer due diligence programmes. -- SOUTH CHINA MORNING POST
