Bank of America Hit with Cease and Desist Order Over BSA Lapses

bank headquarters

The Office of the Comptroller of the Currency (OCC) has taken decisive action against Bank of America (BAC), N.A., issuing a cease-and-desist order due to significant shortcomings in the bank’s compliance with the Bank Secrecy Act (BSA) and its sanctions programs. This regulatory move is grounded in a series of identified violations and practices deemed unsafe or unsound by the OCC.

Among the critical issues highlighted are the bank’s failure to file suspicious activity reports in a timely manner, alongside a notable lapse in addressing a previously flagged deficiency in its Customer Due Diligence processes. This not only points to operational inefficiencies but also raises concerns about the potential for undetected financial crimes or sanction breaches.

The OCC’s order further criticizes the bank’s internal control mechanisms, governance structures, independent testing procedures, and the training regimen for its BSA compliance personnel. These deficiencies suggest a systemic lack of oversight and preparation which could compromise the integrity of financial transactions and the bank’s ability to prevent money laundering and ensure compliance with international sanctions.

In response to these findings, the OCC has mandated that Bank of America undertake comprehensive corrective measures. This includes a thorough enhancement of its BSA and AML compliance frameworks. A key part of the remedial action involves hiring an independent consultant. This external expert will not only assess the current state of the bank’s compliance programs but also conduct lookback reviews. These reviews are essential to verify that all past suspicious activities have been properly documented and reported, ensuring no malpractices have gone unnoticed or unreported.

This regulatory enforcement underscores the increasing scrutiny on banks to maintain robust compliance systems in the face of evolving threats like money laundering and sanctions evasion. It serves as a reminder of the importance of due diligence, effective internal controls, and continuous training in the banking sector. For BofA, this order represents a significant challenge to rectify its compliance practices, potentially affecting its operations, reputation, and relationship with regulatory bodies. The bank’s response to this order will be pivotal in demonstrating its commitment to financial integrity and regulatory compliance, which are fundamental to maintaining trust in the financial system.

Price Action: As of press time, BAC is changing hands at $43.60, down 1.30% intraday.

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