Bank of America profit falls after a 1.2 billion dollar fine over money laundering controls

The second largest bank in the United States opened its earnings report on Wednesday with a fine already attached to it.

Bank of America's third quarter profit fell to 6.9 billion dollars, or 91 cents a share, from 8.3 billion dollars, or 1.04 dollars a share, a year earlier, after the bank set aside 1.2 billion dollars to cover fines by American regulators over widespread failures to detect potential money laundering and other illicit activity. The Treasury Department announced the 1.21 billion dollar penalty on Tuesday, a day before the earnings release. It is the largest penalty ever brought by the Office of the Comptroller of the Currency and the third largest in Treasury's history. Treasury said the bank admitted it willfully violated the Bank Secrecy Act, the law meant to keep criminal money out of the financial system, and called its anti money laundering program deficient and ineffective.

Excluding the settlement charge, which the bank said cost 17 cents a share, earnings were 1.08 dollars a share, still below the 1.10 dollars analysts expected. Revenue was just shy of 30 billion dollars, below the roughly 30.6 billion dollars expected, and that shortfall had nothing to do with the fine. The shares fell in premarket trading on Wednesday.

The history matters to the size of the penalty. Regulators had already ordered the bank in 2024 to fix its system for spotting and flagging suspicious activity. Treasury says suspicious transactions instead piled up without proper investigations. Filing suspicious activity reports is a cornerstone of the system banks are required to run against money laundering. A bank spokeswoman said the bank has already dedicated substantial personnel and resources to its remediation efforts and that those costs are in its current expenses. Bank earnings season continues this week, and September inflation figures are due later on Wednesday. This report describes the bank's results and the regulators' findings. It is not financial advice.