A $1.2 billion charge for failing to catch money laundering sent Bank of America shares tumbling and delivered a blunt reminder: US regulators are still biting the biggest banks.
According to reports, the country’s second-largest lender missed third-quarter profit estimates, posting $6.9 billion in net income, or 91 cents a share, down from $8.3 billion a year earlier. The charge stems from widespread failures to report more than $5 billion in suspicious activity to the US government, a penalty that ranks among the three largest in the Treasury’s history. Shares fell more than 8 per cent, touching their lowest price since May.
Trading weakness compounded the pain. Sales and trading revenue fell 5 per cent to $5.1 billion as the fixed-income, currency and commodities businesses suffered from reduced client activity and shifting interest rates, while equities trading hit a quarterly record. The weakness mirrored a broader pullback across Wall Street’s trading desks, where dealmaking and bond trading momentum have slowed at several large banks.
A consent order with teeth
Regulators placed the bank under a consent order that requires it to work with a third party to identify and report transactions that went undetected — a punishment analysts say could raise questions about expenses and how long the oversight lasts. The action follows a 2024 consent order from the Office of the Comptroller of the Currency, and the bank has been working to overhaul its anti-money-laundering safeguards since late 2023.
The wider signal for the sector
For investors, the episode underscores a shift in banking risk: regulatory costs are now landing alongside market volatility. Bank shares have been sensitive to every rate signal, and sharp sector sell-offs have shown how quickly sentiment can turn. A $1.2 billion fine is manageable for a bank of this size, but a third-party consent order is a reminder that the bill for compliance failures keeps arriving long after the conduct ends. The penalty and earnings details are set out in reports on the bank’s quarterly results.
