Regulators say AML progress fell short, and a lawyer questions what investors were told
A Toronto law firm says it is investigating claims by Canadian investors against Bank of America (BOA) after US regulators imposed more than US$1.21 billion in penalties on the bank for anti-money laundering (AML) and sanctions violations.
Milosevic & Associates PC said Thursday that it is looking at claims tied to securities bought in Canada, or by Canadian residents who bought NYSE-listed securities, between Dec. 23, 2024, and Oct. 13, 2026. Its release does not say a lawsuit has been filed. Another US firm, Glancy Prongay Wolke & Rotter, also announced a securities fraud investigation, TradingKey reported.
“Investors read and relied upon BOA’s statement about cleaning up its AML procedures, even after TD Bank was charged with the same AML deficiency problems,” said Andrew Morganti, the firm’s investor lawyer. The firm contrasted the bank’s July 31 quarterly filing, which it quoted as saying Bank of America “has already completed significant steps to satisfy requirements of the Consent Order,” with the regulator’s Oct. 13 finding. That finding stated: “The Bank has not made sufficient progress in addressing its multiple internal control weaknesses since the 2024 Order was issued.”
What regulators found
The US Treasury said last week that its Financial Crimes Enforcement Network assessed a $1.2 billion penalty, the third-largest in Treasury history. It includes credit for a $750 million penalty from the Office of the Comptroller of the Currency (OCC), the largest in that agency’s history. A separate $11.6 million sanctions settlement brings the total to about $1.21 billion, CNBC reported.
The bank admitted it willfully violated the Bank Secrecy Act, NBC News reported. Regulators said it failed to report more than $5 billion in suspicious transactions on time. More than $1 billion of that involved priority national security risks, including Chinese money laundering networks and activity along the US southwest border, Fox Business reported. The bank must hire an independent third party to review activity its systems missed.
Treasury said the bank “effectively outsourced to third parties a substantial portion of its proactive detection,” according to 24/7 Wall St. Comptroller Jonathan Gould. The bank’s “egregious and continued BSA violations warrant the OCC imposing its largest [civil money penalty] ever assessed against a bank,” CNBC reported.
Bank of America said it was working with regulators to reach penalty resolutions, CNN reported. The OCC’s December 2024 cease-and-desist order carried no monetary penalty, American Banker reported. The action came less than a week after regulators fined American Express $350 million over similar failures, Axios reported.
Market reaction and open questions
The bank reported third-quarter results last week. Net income was $6.9 billion, down from $8.3 billion a year earlier. Earnings per share were 91 cents, or about $1.08 excluding a non-tax-deductible charge of roughly 17 cents a share, against analyst estimates near $1.10. Shares fell more than 8% at one point that day. They had closed at $53.96 the day before the penalty was announced, AskTraders reported.
Underlying results were mixed. Net interest income rose 8%, average loans grew 6% and Global Wealth & Investment Management revenue rose 13%.
The law firm said the bank’s Canadian depositary receipts closed at $27.02 on Oct. 9 and fell to $25.54 on record volume after the penalty news. It said Ontario law measures damages from the date of public correction for up to 10 trading days. Those price figures could not be independently confirmed. The firm also put the penalty at about US$1.3 billion, above Treasury’s $1.21 billion.
