According to a report by the British Broadcasting Corporation (BBC) on October 14th, the U.S. Treasury Department announced on the 13th that American banks were fined $1.2 billion (approximately 8.03 billion yuan) for failing to detect potential money laundering and other illegal activities.
The Ministry of Finance stated that this banking giant failed to report suspicious activities worth over $5 billion to the government, of which $1 billion posed a national security risk and illegal financial risks.
According to the Ministry of Finance, these failures included failing to mark trade transactions that might have ‘significant connections with the United States Southwest–Mexico border’.
American Bank told the BBC: “Our team has made significant progress and is committed to addressing the issues raised by regulators and completing the necessary work.”
This announcement of the fine came less than 24 hours after Bank of America released its quarterly financial reports on the 14th. In an email statement, the bank said: “Our third-quarter results will include a non-deductible expense of $1.2 billion, which reduced net profit by approximately 17 cents per share.”
The statement also said: “We have invested a large amount of personnel and resources into the ongoing rectification efforts, and these costs have been included in the current cost basis.”
This is the third largest penalty ever issued by the US Department of Treasury. At the announcement of the fine, Treasury Secretary Scott Bensen stated: “When a bank of such scale fails to fulfill its anti-money laundering and sanction obligations, the consequences are far beyond their own scope, placing the entire American financial system at risk of major illegal finance.”
The Ministry of Finance stated that the bank relied too much on inquiries from external parties such as law enforcement agencies and other financial institutions, rather than relying on its own internal controls. This means that it has ‘virtually outsourced a significant portion of its proactive detection and reporting obligations to third parties’.
As part of the agreement for reconciliation, American Bank acknowledges its “intentional violation” of the 《Bank Secrecy Law》, failing to maintain compliant anti-money laundering programs, and failed to conduct necessary due diligence on foreign correspondent accounts, nor submit suspicious activity reports.
These $1.2 billion fines include those imposed by the Office of the Comptroller of Financial Institutions (OCC) and the Office of Foreign Assets Control (OFAC) in the United States.
OCC's $750 million fine is the largest penalty ever imposed by the agency; OFAC stated that its settlement with the company involved 475 violations of sanctions regulations related to Russia, Iran, narcotics, and global terrorism.
