Bank of America reported a 17 percent decline in third-quarter profits as it allocated $1.2 billion to cover regulatory fines related to money laundering and sanctions violations. The bank’s net income fell to $6.9 billion for the quarter ended September 30, down from $8.3 billion a year earlier. Revenues rose 3 percent to $30 billion but were weighed down by weak trading revenue and investment banking fees.
The fines were announced by the U.S. Treasury less than 24 hours before the bank’s earnings release. The Treasury’s Financial Crimes Enforcement Network imposed the largest-ever civil penalty of $750 million through the Office of the Comptroller of the Currency (OCC), while the Office of Foreign Assets Control added an $11.6 million settlement for apparent violations of sanctions relating to Iran, Russia, narcotics, and terrorism. The regulatory action concluded that Bank of America failed to properly report over $5 billion in suspicious transactions involving potential Chinese money laundering networks and illicit finance activities near the southern U.S. border.
The bank has been placed under a consent order requiring it to work with an independent third party to enhance its monitoring and reporting systems. Bank of America Chief Executive Brian Moynihan acknowledged the seriousness of the compliance failures, noting the bank has invested billions in technology and employed thousands of workers dedicated to combating financial crime. Chief Financial Officer Alastair Borthwick said the bank has allocated “thousands” of employees to the remediation efforts tied to a consent order first imposed in 2024.
U.S. Treasury Secretary Scott Bessent emphasized the broader risks posed by such compliance lapses. He stated that financial institutions play a critical role in protecting national security and economic stability, warning that failures at a bank of this size expose the entire U.S. financial system to illicit finance risks.
The penalties are among the largest issued by U.S. regulators, highlighting increasing scrutiny over anti-money laundering controls among major financial institutions. In response to the fine, Bank of America’s shares dropped as much as 8 percent during morning trading before closing about 5.5 percent lower.
Bank of America’s fixed income revenues fell 17 percent year on year to $2.6 billion, reflecting broader market weakness following recent interest rate hikes by the Federal Reserve. Equity trading revenues, however, rose 11 percent to $2.5 billion. Investment banking fees declined 11 percent to $1.8 billion, impacting overall revenue growth.
Meanwhile, Morgan Stanley, another major Wall Street firm reporting earnings the same day, also experienced pressures in fixed income revenue, which fell below analysts’ expectations to $2 billion. However, Morgan Stanley’s equities trading benefited from increased client activity related to artificial intelligence, rising 41 percent to $5.8 billion and helping lift third-quarter profits 6.5 percent to $4.9 billion.
Bank of America returned $2.2 billion to shareholders through dividends and an additional $6 billion via share repurchases during the quarter. Moynihan highlighted that despite challenges in investment banking and sales and trading, the bank achieved organic growth by deepening existing client relationships and expanding its commercial lending business across all client segments.