Bank of America’s shares fell 8% on Wednesday, wiping approximately $30 billion off its market value after US regulators imposed $1.21 billion in penalties over money laundering control failures and sanctions violations. The development coincided with weaker-than-expected trading revenue and renewed concerns over the bank’s financial position.
The penalty includes the largest fine ever imposed by the Office of the Comptroller of the Currency and ranks as the third-largest issued by the US Treasury Department. The bank also reported a $1.2 billion non-tax-deductible charge, reducing its net income by 17 cents per share.
Regulatory scrutiny intensified after the bank’s transaction-monitoring systems failed to identify thousands of payments involving approximately $4 billion in activity. Authorities also found shortcomings in reporting suspected money laundering linked to businesses involved in auctions of salvaged vehicles.
Investigators reviewing suspicious transactions faced a substantial backlog, which peaked at nearly 200,000 cases by 2024. Regulators had raised concerns about the bank’s compliance systems two years earlier, but continued to question whether sufficient progress had been made.
At the centre of the concerns is Event Processor, a transaction-monitoring system introduced by the bank in 2010. Regulators found that its thresholds for flagging suspicious activity were too high. A subsequent review using lower thresholds indicated that nearly 8,900 additional suspicious activity reports would have been filed.
The bank’s trading performance added to investor concerns, with bond-trading revenue declining 17% to $2.55 billion, missing market expectations. Its bond portfolio also recorded more than $100 billion in unrealised losses, reviving concerns about an issue that has troubled investors previously.
Chief Executive Brian Moynihan said the bank had agreed to settle the regulatory matter and was working to address the identified shortcomings.
The latest developments add pressure on Moynihan, who has led the bank for nearly two decades, as it seeks to restore investor confidence and strengthen its compliance operations.
