A $1.2 billion fined for overlooking money-laundering weighed on Bank of America’s earnings report released Wednesday.
B of A, the nation’s second-largest bank, was hit with hefty civil penalties a day earlier for failing to make timely reports on more than $5 billion in suspicious activity, including Chinese money laundering networks and narcotics trafficking, according to the Treasury Department.
On Wednesday, the banking giant said the fine dragged its earnings down by 17 cents a share.
It reported a profit of $6.9 billion, or 91 cents a share – down from $8.3 billion, or $1.04 a share, in the same period last year.
Excluding the fine, it reported adjusted earnings per share of $1.08 – still missing estimates of $1.10 a share.
Revenue rose to $30 billion from $29 billion, though it was below analysts’ expectations of $30.58 billion.
The Treasury Department said more than $1 billion of the suspicious, unreported activity involved national security and other serious risks — including Chinese money laundering networks and illicit financial activity at the southwest border, though the feds didn’t go into detail on those crimes.
“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 US financial system to significant illicit finance risks,” Treasury Secretary Scott Bessent said in a statement.
“Today’s actions send a clear message that even the biggest financial institutions are not above the law.”
A Bank of America spokesperson said the company has been cracking down on financial crime, saying it’s “invested billions of dollars in technology and dedicated thousands of employees” to the cause.
“We have already dedicated substantial personnel and resources to our ongoing remediation efforts, and those costs are in the current expense base,” the spokesperson added.
The bank is now facing the third-largest penalty in Treasury history. Part of that $1.2 billion sum includes a $750 million penalty from the Office of the Comptroller of the Currency – the largest fine in the OCC’s history.
The penalties stemmed from violations cited in a 2024 OCC Consent Order and investigation.
Bank of America separately agreed to an $11.6 million settlement with the Office of Foreign Assets Control over allegations it violated sanctions on Iran, Russia, narcotics and global terrorism.
As part of the agreement, Bank of America admitted that it willfully violated the Bank Secrecy Act by failing to implement adequate compliance programs, conduct due diligence for foreign accounts and timely file suspicious activity reports.
Instead, the bank “prioritized its revenues and minimized the impact on its required compliance resources,” relying so heavily on law enforcement inquiries that it “effectively outsourced to third parties” its detection and reporting duties, the Treasury said in a press release.
As a result, the bank failed to timely respond to mounting red flags, including potential ties to narcotics trafficking proceeds, according to the department.
Bank of America will be forced to work with a third party to identify and review suspicious transactions that went unnoticed due to compliance failures, and undergo an independent review of its suspicious activity monitoring, the department said.
Meanwhile, Morgan Stanley on Wednesday reported third-quarter revenue of $20.3 billion – up from $18.2 billion last year and beating estimates of $19.93 billion.
Net income jumped to $4.97 billion, or $3.03 a share – up from $4.61 billion, or $2.80 a share, last year, and above expectations of $2.93 a share.
Shares of Bank of America slumped 5.9% Wednesday. Morgan Stanley also fell 3.5%, since some business metrics still showed slower improvement, according to Wells Fargo analyst Mike Mayo.