Bank of America profit hurt by $1.2 billion fine over anti-money laundering shortcomings

Bank of America's profit ​fell in the third quarter as ​it set aside $1.2 billion to ‌cover ​fines by US regulators over widespread failures to detect potential money laundering and other illicit activity.

Shares of the Charlotte, ‌North Carolina-based bank fell 3.7% in premarket trading. The stock has slipped 1.9% this year through last close. The second-largest US bank's profit was $6.9 billion, or 91 cents per ‌share, in the three months ended September 30, it said on Wednesday. That ‌compares with $8.3 billion, or $1.04 per share, a year earlier.

The fine, unveiled on the eve of BofA's third-quarter earnings, stems from the second-largest US bank's failure to report over $5 billion in suspicious activity ⁠to the ​US government. The actions, which ⁠include the third-largest penalty in US Treasury history, highlight growing regulatory scrutiny on shortcomings in tackling money ⁠laundering at US financial giants.

Regulators have placed BofA under a consent order — a major regulatory ​punishment — that requires the bank to work with a third party to identify ⁠and report suspicious transactions that went undetected. Wall Street analysts said the penalty would likely add to negative ⁠sentiment ​and raise concerns about expenses and the duration of the order.

The penalty follows a 2024 consent order from the Office Of the Comptroller of the ⁠Currency, which had required BofA to address shortcomings in its abilities to police money laundering. Since ⁠late 2023, BofA ⁠has been working with US regulators to overhaul its safeguards against money laundering and other illegal transactions.