WASHINGTON — For years, as money bearing the hallmarks of Chinese laundering networks moved through its accounts, Bank of America looked past warnings from its own compliance staff, the U.S. Treasury Department has found. Treasury has imposed more than $1.2 billion in penalties that also cover suspicious flows tied to the U.S.–Mexico border and used-car sales, along with apparent sanctions violations involving Iran and Russia. The case echoes the failures at HSBC and TD Bank.
The October 13 actions against America’s second-largest bank found it failed to report more than $5 billion in suspicious transactions on time. More than $1 billion of that implicated what the Financial Crimes Enforcement Network (FinCEN) calls national security and priority illicit-finance risks.
The most consequential national security findings involve Chinese money-laundering transactions with a nexus to the U.S.–Mexico border, which FinCEN classes alongside cartels and narcotics trafficking as a priority risk.
According to FinCEN’s consent order, the violations occurred from at least January 2018 through July 2025, a period during which Bank of America’s internal monitoring systems failed to detect or promptly escalate large volumes of suspicious activity.
The investigation identified hundreds of millions of dollars in transactions consistent with Chinese money-laundering typologies, alongside more than $600 million in transactions showing indicators of potential trade-based money laundering involving used vehicles. Roughly one-third of the latter transactions had connections to the southwestern border.
A separate Treasury financial trend analysis, released in August 2025, examined 137,153 Bank Secrecy Act reports filed between January 2020 and December 2024 and identified approximately $312 billion in suspicious transactions associated with suspected Chinese money-laundering networks.
FinCEN warned that these networks had become important professional laundering organizations for Mexico-based drug cartels, while also facilitating fraud, human trafficking and human smuggling.
The relationship is driven partly by complementary financial demands. Mexican drug trafficking organizations accumulate large quantities of U.S. dollars from narcotics sales and need mechanisms to move or convert those proceeds without attracting law enforcement scrutiny. Meanwhile, individuals seeking to move wealth out of China face restrictions imposed by Beijing on cross-border capital transfers.
The consent order cites FinCEN’s 2025 advisory on Chinese laundering networks serving Mexico-based cartels and quotes one of its red flags: “A customer, especially a Chinese national, regularly uses a credit card to purchase large volumes of electronics or other luxury goods.”
The patterns investigators found at Bank of America, among customers that claimed to operate in logistics or electronics, track those warnings. They included “high volumes of back-to-back credit card purchases at major retailers and shipping companies inconsistent with customer profiles” and “large wire transfers to counterparties in China with generic descriptions (e.g., “for goods”) and no discernible business rationale.”
The same customers made regular payments to clear credit cards issued by other banks, “including for cards in the name of third-party individuals for which there was no apparent commercial purpose.”
They also sent repeated transfers to counterparties “with no web presence operating from residential addresses.”
The Bank of America findings bear troubling similarities to two earlier banking scandals involving Mexican drug cartels, Chinese money-laundering networks and international sanctions evasion.
In December 2012, HSBC agreed to a $1.9 billion U.S. resolution after admitting failures that allowed at least $881 million in narcotics proceeds, including funds associated with Mexico’s Sinaloa Cartel and Colombia’s Norte del Valle Cartel, to move through the American financial system.
HSBC had failed to monitor more than $670 billion in wire transfers and $9.4 billion in physical U.S. dollar purchases involving its Mexican affiliate. Investigators also found that HSBC personnel had stripped or concealed identifying information from payments involving sanctioned jurisdictions, including Iran, allowing approximately $660 million in prohibited transactions to pass through U.S. financial institutions.
The bank entered a five-year deferred prosecution agreement.
Twelve years later, in October 2024, TD Bank pleaded guilty to criminal violations involving its anti-money-laundering program and a money-laundering conspiracy, as part of a coordinated resolution exceeding $3 billion.
U.S. investigators found that TD had left approximately $18.3 trillion in transactions outside automated monitoring over several years. Three laundering networks moved more than $670 million through the bank, with five employees assisting one network in laundering approximately $39 million. The broader case included networks associated with Chinese money laundering and narcotics proceeds.
“Today’s actions send a clear message that even the biggest financial institutions are not above the law,” Treasury Secretary Scott Bessent said. Treasury’s Office of Foreign Assets Control separately settled with the bank over 475 apparent violations of sanctions programs. The programs covered Russia, Belarus, Iran, Burma, Somalia, narcotics and global terrorism.
A Bank of America spokesperson said: “Financial crime compliance is serious, and we are responsible for getting it right.”
The clearest picture of what the bank saw, and declined to act on, comes from its dealings with two online auto auction platforms, with many of the transactions tracked to the Mexican border.
The consent order identifies them only as Customer A and Customer B. Both sell salvaged American vehicles to buyers around the world. Customer A had banked with Bank of America since 1995, and Customer B since 1996.
Between October 2020 and May 2025, the two companies deposited “more than 680,000 individual transactions forming approximately 220,000 unique groups of suspicious deposits totaling over $660 million,” most of them money orders bought at money services businesses by vehicle buyers.
In September 2021, a money services business that had issued some of the money orders asked Bank of America about possible structured purchases deposited into Customer B’s account. The bank replied that it saw no unusual pattern and nothing to indicate illicit activity. FinCEN found that roughly 51,000 groups of suspicious deposits, more than 23 percent of the total, were later processed for Customer B without timely reporting.
Inside the bank, compliance staff were raising alarms.
Case notes from June 2020 recorded that “although [Customer A] is considered a suspect, account will not be closed.”
By August 2022, Customer A had been tied to more than 100 money-laundering cases, most involving fraud. Informed of the tally, one compliance employee replied: “YESSSSSSSSSSSS . . . Concern that the client does not have visibility or understanding of source of funds.”
Another wrote, “WOW.”
At least five federal agencies had shown interest in the account. Compliance staff described “an insane amount of cases/investigations” and “money laundering concerns, potentially facilitating transnational crime,” and in July 2022 recommended closing the accounts.
But the revenue side of the bank pushed back.
Customer A’s relationship manager described it as “a large and valued client” generating about $6 million a year. “The industry isn’t the cleanest so there is always fraudster risk here,” the manager wrote, adding that “a closure here would be detrimental given the impact of this relationship.”
In January 2023, compliance staff recorded that a “law enforcement investigation considers the activity through these [online auto auction] companies to be money laundering.” Two months later the closure recommendation was withdrawn in favor of a mitigation plan. Customer A kept accepting payments from third parties through its Bank of America account until June 2025.
In a footnote, FinCEN cites its 2011 finding against Lebanon’s Lebanese Canadian Bank, which identified used-car exports as a method of moving illicit proceeds “including through a network that benefited Hezbollah.”
The Iranian dimension of the enforcement action intersects with an increasingly aggressive U.S. campaign against Tehran’s shadow banking system. Iran is one of four priority risks the government has ordered Bank of America’s independent review to examine first. Separately, the Office of Foreign Assets Control found apparent sanctions violations involving Iran and other sanctioned jurisdictions.
The action followed a series of Treasury measures targeting the international financial intermediaries used to sustain Iran’s economy, military procurement and foreign operations.
On May 1, 2026, Treasury sanctioned three Iranian foreign currency exchange houses and associated front companies under its Economic Fury campaign. The department said Iranian exchange houses collectively facilitated billions of dollars in foreign currency transactions annually. It said they played a critical role in converting proceeds from Iranian oil sales, often settled in Chinese yuan, into currencies more useful to Tehran’s military establishment and its partners.
The Treasury documents do not establish that the exchange houses sanctioned in that campaign were the same actors involved in Bank of America’s apparent sanctions violations.
Bank of America’s case showed its own sophisticated compliance machine failed.
In 2010 the bank built a proprietary monitoring system called Event Processor, which scored alerts and grouped them by customer. A case went to a human investigator only when a group reached 20 points. That threshold, the order says, was “initially set by stakeholder judgment,” and it stayed in place until December 2023.
The bank’s own testing repeatedly found that the system was missing reportable activity. Alerts tied to cash structuring and to High Intensity Drug Trafficking Areas carried weights of a single point, despite producing suspicious activity reports more than half the time. Groups scoring just below the threshold turned up reportable activity at higher rates than cases above it.
In 2023, when one internal test produced an unfavorable result, the bank’s then–global head of financial crimes directed a senior manager to repeat it. The second test concluded the team was “confident that EP is working as intended.”
When regulators finally pressed the bank to lower the threshold, a one-time review found it “had failed to identify and file nearly 8,900 SARs, with transaction activity totaling nearly $4 billion.” Fixing the system required an “incremental 750” staff. FinCEN concluded the bank had “likely saved hundreds of millions of dollars in compliance-related expenditures.”
In the meantime, the bank leaned on police to find crime for it. For several years, more than a third of its money-laundering investigations began with subpoenas, seizure warrants or referrals rather than its own monitoring, “with this number peaking at nearly 50% in 2023.”
Bank of America admitted the violations were willful. Under federal civil enforcement, the order notes, that standard is met when a bank “acted with either reckless disregard or willful blindness.”
