Bank of America, Executives Sued After $1.2 Billion Regulatory Penalties

The New England Teamsters Pension Fund initiated a federal class-action lawsuit against Bank of America Corporation, Chief Executive Officer Brian Moynihan, and Chief Financial Officer Alastair Borthwick on October 16, 2026[1][2]. This legal action followed just three days after U.S. federal regulators announced penalties exceeding $1.21 billion against the banking giant for violations of anti-money laundering and sanctions laws[2][5].

This lawsuit and the substantial regulatory fines highlight profound and systemic failures within a major U.S. financial institution's compliance systems. These issues directly affect investor confidence and raise concerns about the integrity of financial reporting and the oversight of complex banking operations, which are essential to the stability of the broader U.S. financial system.

What the Records Show

The lawsuit, identified as case number 1:26-cv-09137, was filed in the U.S. District Court for the Southern District of New York[1][3]. The complaint names Bank of America Corporation, Brian Moynihan, and Alastair Borthwick as defendants[2][4]. The New England Teamsters Pension Fund asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5[2][4].

The central allegation is that Bank of America and its executives misled investors. The complaint states they presented a picture of progress in addressing compliance deficiencies while minimizing the true scope and financial consequences of these issues[2][4]. Specifically, the lawsuit points to systemic weaknesses in Bank of America, N.A.'s (BANA) Bank Secrecy Act (BSA) and anti-money laundering (AML) programs[2][4]. Bank of America, N.A. processes hundreds of trillions of dollars in domestic and international transactions each year[4]. The alleged weaknesses resulted in missed, delayed, or inaccurate suspicious activity reports that involved billions of dollars, a finding corroborated by regulators[2][4]. The complaint also highlights deficiencies in BANA's sanctions compliance program, which reportedly led to the processing of transactions that violated sanctions programs[2]. Internal reports had documented BANA's AML deficiencies for years, yet these problems were allegedly not adequately remedied, even after a 2024 Consent Order[2][4].

The class action seeks to represent all persons and entities, excluding the defendants and their affiliates, who purchased or otherwise acquired Bank of America common stock between August 1, 2025, and October 13, 2026, inclusive[2][4]. This period is referred to as the “Class Period”[4]. The plaintiffs are seeking unspecified damages, along with interest, costs, and attorney and expert fees[2]. A deadline of December 15, 2026, has been set for lead plaintiff motions in the case[2].

The Regulatory Findings and Penalties

On October 13, 2026, the U.S. Treasury Department announced penalties totaling more than $1.21 billion against Bank of America for violations of AML and sanctions laws[5]. This action involved three distinct federal regulatory bodies: the Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency (OCC), and the Office of Foreign Assets Control (OFAC)[5].

FinCEN assessed a $1.2 billion penalty against Bank of America for its “failure to mitigate and report priority national security risks, including Chinese Money Laundering Networks and illicit finance along the southwest border”[5][6]. FinCEN stated that Bank of America failed to timely report over $5 billion in suspicious transactions[7][11]. This $1.2 billion penalty is the third-largest in the Treasury Department's history[5][6].

The OCC imposed a $750 million civil money penalty due to the bank's “deficient and ineffective BSA/AML compliance program”[5]. This amount represents the largest civil monetary penalty ever assessed by the OCC[5][6]. This $750 million penalty is credited toward the larger FinCEN penalty[5][9].

OFAC reached an $11.6 million settlement with Bank of America for “apparent violations of numerous sanctions programs, including on Iran, Russia, narcotics, and global terrorism”[5][8]. OFAC noted that these violations were considered non-egregious and were largely not voluntarily self-disclosed by the bank. The settlement amount did not include any reductions for remedial measures or cooperation[5].

Bank of America admitted that it “willfully violated” the 1970 Bank Secrecy Act by failing to maintain a compliant AML program and to file suspicious activity reports[8]. The regulatory actions specifically noted that these issues persisted despite a cease-and-desist order issued by the OCC against BANA on December 23, 2024[4].

Timeline of Compliance Failures

The issues cited by regulators and in the lawsuit have a documented history. On December 23, 2024, the OCC issued a cease-and-desist order against Bank of America, N.A., specifically targeting deficiencies in its BSA/AML and sanctions compliance programs[4]. This order required the bank to implement comprehensive corrective actions[4].

The class period for the recent lawsuit covers August 1, 2025, through October 13, 2026[2]. During this time, the complaint alleges, the bank continued to present an inaccurate picture of its compliance progress to investors, despite internal reports that had reportedly documented AML deficiencies for years[2][4]. The regulatory announcements on October 13, 2026, further highlighted that these compliance problems had continued, despite the earlier 2024 cease-and-desist order[2][5].

Financial Fallout and Bank's Response

The announcement of these penalties had a swift and significant impact on Bank of America's stock. On October 14, 2026, the bank's stock, traded under the ticker NYSE: BAC, dropped 4.8% during regular trading hours, falling from a closing price of $53.96 to $51.39[2].

The regulatory settlement charge also reduced Bank of America's diluted earnings per share by $0.17 for the third quarter of 2026[4]. This contributed to a 17% decrease in the bank's net income for the quarter, which fell to $6.9 billion from $8.3 billion reported a year prior[11].

In response to the fines, a Bank of America spokesperson stated, “Financial crime compliance is serious, and we are responsible for getting it right”[8]. The spokesperson also noted, “We worked with regulators to reach these penalty resolutions stemming from violations cited in the previously reported 2024 OCC Consent Order and FinCEN's investigation”[10]. Bank of America stated it had invested billions of dollars in technology and assigned thousands of employees to strengthen its financial crime controls[11].

Treasury Secretary Scott Bessent commented on the broader implications of Bank of America's failures. He stated that the bank's failures exposed the entire U.S. financial system to “significant illicit finance risks”[5][7]. Secretary Bessent added that the actions by regulators sent a “clear message that even the biggest financial institutions are not above the law”[5][9].

Wider Implications

Bank of America Corporation now faces substantial financial penalties, a notable drop in its stock value, and an ongoing class-action lawsuit. Its compliance and operational practices are under intense scrutiny, necessitating major remediation efforts to address the identified systemic issues. The New England Teamsters Pension Fund and other shareholders claim they suffered financial losses directly attributable to the bank's alleged misrepresentations and the subsequent decline in stock price[2][4]. They are pursuing legal recourse through the class-action lawsuit[2].

Brian Moynihan, the Chief Executive Officer, and Alastair Borthwick, the Chief Financial Officer, are named defendants in the shareholder lawsuit, facing direct allegations of misleading investors regarding the bank's compliance status[2][4]. Beyond the immediate parties, regulators have emphasized that Bank of America's failures created vulnerabilities that exposed the broader U.S. financial system to illicit finance risks[5].

What We Could Not Confirm

We could not confirm the specific details of the internal reports that allegedly documented AML deficiencies within Bank of America for years prior to the regulatory actions[2]. We also could not confirm the exact wording of Bank of America's SEC filings that allegedly misled investors regarding the bank's compliance status[2]. The specific amount of damages sought by the New England Teamsters Pension Fund and other class members has not been specified[2]. Lastly, it could not be confirmed whether the U.S. Department of Justice plans to pursue any parallel criminal actions related to these violations, unlike prior large FinCEN fines[6].