BofA Fined $16.6M for
Violating Drug-Trafficking Sanctions
Zacks By Zacks Equity Research
July 25, 2014 5:30 PM
Endless legal issues and penalties associated with
improper business conducts, continue to haunt Bank of
America Corporation (BAC). BofA, in order to resolve the
allegations of violating U.S. sanctions against
drug-trafficking, will be paying a $16.6 million fine.
Per the U.S. Treasury Department, BofA (Bank of America)
processed nearly 208 transactions for 6 individuals who
have been identified as narcotics traffickers. In
aggregate, transactions worth approximately $91,192
million were processed between Sep 2005 and Mar 2009.
Additionally, BofA failed to block 5 accounts owned by
10 other traffickers, thereby violating the Foreign
Narcotics Kingpin Sanctions Regulations. Further, the
bank did not timely file blocked property reports on
accounts held by four Specially Designated Narcotics
Moreover, BofA, for more than two years, failed to fix
the problem in its screening process. This, in turn, led
to processing of additional 79 similar transactions.
According to the U.S. Treasury, the base penalty for all
these violations should have been more than $83 million.
However, BofA is paying a substantially smaller amount,
considering its cooperation with the law-enforcement
authorities and eventual amendment of the issue causing
the lapses. The company also identified other accounts
operated by it for sanctioned individuals.
BofA is not the only major global bank that has
faced fines for sanction violations. Over the last few
years, the U.S. subsidiaries of many global banks
including those of HSBC Holdings plc (HSBC), ING Groep
NV (ING), BNP Paribas SA and Barclays PLC (BCS) have
been penalized for money-laundering or sanctions
We believe that such stringent actions by law
enforcement agencies will go a long way in restoring
investors’ confidence. Though this would lead to a
marginal rise in the legal expenses for BofA, the
resolution will remove yet another headwind.
Currently, BofA carries a Zacks Rank #3 (Hold).