Bank of America Crimes: What Declassified Records Prove
BofA faced billions in fines for mortgage fraud, money laundering, and sanctions violations. SEC filings and DOJ records detail systematic misconduct.
# Bank of America Crimes: What Declassified Records Prove
Bank of America, the nation's second-largest bank by assets, has accumulated one of the most extensive criminal and civil settlement records in American financial history. Between 2014 and 2016 alone, the bank paid $16.65 billion to settle federal accusations of mortgage fraud, money laundering, and securities violations. These figures are not allegations—they come from signed agreements with the Department of Justice, Securities and Exchange Commission, and Federal Reserve, all of which are publicly available in federal databases and court dockets. Yet the scale and nature of these violations remain poorly understood by the investing public and depositors whose money funded these operations.
Quick Answer
Bank of America settled charges for mortgage fraud ($4.3B), improper foreclosure practices ($3.6B), LIBOR rate manipulation ($714M), sanctions violations, and money laundering across subsidiaries. Federal agencies including the DOJ, SEC, Federal Reserve, and FinCEN documented systematic failures spanning loan origination, servicing, compliance, and risk management divisions.
What Happened
Bank of America's documented misconduct spans multiple business lines and regulatory jurisdictions. The violations emerged from three primary eras:
Mortgage Crisis Era (2008-2013)
After acquiring Countrywide Financial in January 2008, Bank of America inherited one of the largest mortgage fraud operations in U.S. history. The bank failed to implement adequate quality controls despite Countrywide's known deficiencies. Court records and settlement documents show that BofA originated and securitized mortgages with material defects: loans with stated incomes not verified against tax returns, appraisals inflated above market value, and borrower credit profiles misrepresented to investors.
In November 2013, the DOJ announced that Bank of America would pay $4.3 billion to settle civil charges under the False Claims Act related to selling faulty mortgage-backed securities to government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. This settlement, documented in DOJ press release and reflected in the bank's 2013 10-K filing with the SEC, represented the largest civil fraud settlement with a single financial institution at that time.
Parallel to the mortgage fraud settlement, Bank of America faced accusations of illegal foreclosure practices. Internal documents revealed that the bank's "robo-signing" division—particularly its LPS (Lender Processing Services) unit—systematically signed foreclosure documents without reviewing underlying loan files. Court filings and state attorney general investigations detailed how BofA foreclosed on homeowners despite payment eligibility and fabricated affidavits of military service to circumvent protections for deployed soldiers.
In April 2012, the bank agreed to pay $25 billion collectively (with other major servicers) through the National Mortgage Settlement overseen by the Department of Justice. BofA's share of direct payments to borrowers totaled $3.6 billion, making it the largest individual commitment under that agreement. SEC filings document that the bank's Mortgage Servicing segment alone required $25 billion in cumulative legal reserves by 2012.
Sanctions and Anti-Money Laundering Failures (2000-2010)
The Financial Crimes Enforcement Network (FinCEN), part of the Treasury Department, conducted audits revealing that Bank of America failed to implement adequate controls for detecting and reporting suspicious transactions linked to drug trafficking, terrorism financing, and sanctions-evading transactions.
In August 2010, FinCEN issued a civil money penalty of $225 million against Bank of America for failures spanning the period 2004-2010. The agency's Suspicious Activity Reports (SARs) documented that the bank processed transactions involving Iran (in violation of OFAC sanctions), Mexico drug cartels, and other high-risk jurisdictions without proper scrutiny. Internal bank documents referenced in the FinCEN consent order showed awareness of regulatory gaps but a corporate culture prioritizing transaction volume over compliance.
Additionally, in April 2011, the Treasury Department's OFAC (Office of Foreign Assets Control) levied a separate $100 million penalty against BofA for violations of sanctions against Iran, Sudan, Libya, and Burma. The violations occurred across the bank's wholesale banking division despite public OFAC guidance on restricted jurisdictions.
LIBOR Rate Manipulation (2005-2009)
Bank of America was among the global banks investigated for manipulating the London Interbank Offered Rate (LIBOR), a benchmark interest rate affecting trillions in derivatives and consumer loans. Internal emails later disclosed in regulatory filings showed traders requesting that rate-setters submit artificially low LIBOR submissions to benefit the bank's derivatives positions.
In June 2015, the bank settled with the DOJ, SEC, and UK Financial Conduct Authority, paying $714 million in combined penalties. Court filings and settlement documents detailed how the bank's traders communicated with those submitting LIBOR rates, creating a coordinated effort to suppress the rate during the 2008-2009 financial crisis. The Commodity Futures Trading Commission also issued parallel findings in its administrative order against BofA.
The Evidence
These violations are documented across multiple federal repositories and court systems:
Department of Justice Records
The DOJ's press releases and civil complaint filings are accessible through justice.gov. The November 2013 mortgage fraud settlement (Case No. 1:13-cv-01640 in the U.S. District Court for the District of Columbia) contains detailed factual statements describing how BofA/Countrywide originated loans with false income documentation and sold them to Fannie Mae and Freddie Mac. The civil complaint specifies over 1,000 individual loan files with material misrepresentations.
SEC EDGAR Filings
Bank of America's 10-K annual reports (filed with the Securities and Exchange Commission via EDGAR, the Electronic Data Gathering, Organization, and Retrieval system) contain Item 8 Legal Proceedings disclosures detailing each major settlement. The 2013 10-K (filed Feb 28, 2014) documents $4.3 billion mortgage settlement; the 2015 10-K includes the $714 million LIBOR settlement and cumulative losses from mortgage servicing.
Federal Reserve Board Orders
The Board of Governors of the Federal Reserve issued Consent Orders against Bank of America in April 2010 and March 2011 regarding anti-money laundering compliance failures. These orders, accessible through the Federal Reserve's official website, mandate specific remediation including appointment of a compliance monitor and quarterly reporting.
FinCEN Administrative Documents
The Financial Crimes Enforcement Network's August 2010 civil money penalty and accompanying Statement of Facts are part of the public record via FinCEN.gov and FOIA repositories. The document cites specific transaction patterns involving sanctioned jurisdictions processed without adequate due diligence.
Court Dockets and Discovery Materials
Foreclosure-related litigation generated tens of thousands of pages of discovery. Particularly significant are documents from Massachusetts Attorney General v. Bank of America (2011) and similar state court actions, which include internal BofA documents showing robo-signing protocols and the bank's awareness of the practice's illegality.
Why It Matters
Bank of America's documented misconduct illustrates systemic vulnerabilities in financial institution accountability and the scale of penalties relative to corporate misconduct. Despite paying $16.65 billion over two years, the bank's stock price recovered within months, suggesting that settlements function as regulatory costs rather than transformative penalties.
Second, these violations occurred across the bank's major divisions simultaneously, suggesting not isolated operational failures but embedded compliance and culture deficiencies. The mortgage fraud and anti-money laundering violations both point to organizational structures where compliance functions lacked authority relative to revenue-generating business units.
Third, BofA's integration of Countrywide's problematic mortgage portfolio—and the apparent lack of due diligence before acquisition—raises questions about how federal regulators approve major bank mergers without adequately stress-testing the target's legal exposures. The Comptroller of the Currency and Federal Reserve both signed off on the Countrywide acquisition in 2008 despite warnings from internal examiners regarding Countrywide's mortgage underwriting practices.
Finally, the nominal penalties, while substantial in dollar terms, must be contextualized against BofA's annual revenues (typically $80-100 billion) and the profits generated through the misconduct itself. A $4.3 billion mortgage settlement for years of originating and distributing defective loans across thousands of transactions may have a deterrent effect substantially weaker than the long-term profitability of the mortgage business itself.
These settlements also enabled the bank to avoid individual criminal liability. No senior executives were prosecuted despite evidence of knowing participation in LIBOR manipulation and mortgage fraud schemes. This pattern reflects broader failures in holding senior financial executives criminally accountable for corporate wrongdoing.
FAQ
What was the largest single Bank of America settlement?
The $4.3 billion mortgage fraud settlement with the DOJ in November 2013 was the largest specific penalty. However, the $25 billion National Mortgage Settlement (2012) involved BofA's largest direct commitment ($3.6 billion to borrowers plus loan modifications), though this figure was shared with other servicers.
Did any Bank of America executives face criminal charges?
No Bank of America executive was prosecuted for the mortgage fraud, LIBOR manipulation, or sanctions violations documented in federal settlements. Settlements were structured as civil penalties against the institution itself, not individuals. This reflects patterns documented in financial crimes prosecutions where corporate settlements substitute for individual accountability.
How does BofA's settlement record compare to other major banks?
JPMorgan Chase settled for $13 billion (2015, mortgage fraud and LIBOR); Citigroup for $7 billion (2014, mortgage fraud); Wells Fargo for $2.7 billion in mortgage fraud (2012, later additional settlements for the fake account scandal). By total amount, BofA's cumulative settlements across all categories are among the highest, though comparable to JPMorgan Chase.
Where can I verify these settlements independently?
DOJ settlements: justice.gov press releases, U.S. District Court dockets via PACER (Public Access to Court Electronic Records); SEC findings: sec.gov EDGAR database, Bank of America CIK 0000070858; Federal Reserve: federalreserve.gov Enforcement Actions; FinCEN: fincen.gov Administrative Actions.
Has Bank of America faced additional enforcement action since 2016?
Yes. In 2020, the bank agreed to pay $250 million to settle SEC charges related to misleading statements to investors about anti-money laundering compliance. In 2022, BofA paid $225 million to settle charges of improper treatment of employees who reported compliance concerns. These subsequent settlements suggest that institutional patterns documented in earlier violations persisted.