Endless legal issues and penalties associated with improper
business conducts, continue to haunt
Bank of America Corporation
). BofA, in order to resolve the allegations of violating U.S.
sanctions against drug-trafficking, will be paying a $16.6 million
Per the U.S. Treasury Department, BofA 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
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 Traffickers.
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 (
), ING Groep NV (
), BNP Paribas SA and Barclays PLC (
) 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).
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