The U.S. Securities and Exchange Commission (SEC) on June 29 announced it had settled charges against Bank of America’s Merrill Lynch unit for failing to report multiple Suspicious Activity Reports (SARs) between April 2020 and September 2024, with Merrill Lynch agreeing to a $7.5 million fine as part of the settlement.
According to an administrative proceeding document posted on the SEC’s website, Merrill Lynch relied on Bank of America’s in-house Bank Secrecy/Anti Money Laundering program to fulfill its SAR reporting requirements to the federal regulation agency. SARs are designed to prevent instances of money laundering, fraud, or terrorist financing and are supposed to be filed with the Financial Crimes Enforcement Network of the Treasury Department within 30 days of any questionable transactions as stipulated by the Bank Secrecy Act of 1970.
Bank of America’s transaction monitor software aggregated any potentially suspicious transactions into event groups and assigned them a risk score, the SEC report stated. However, only certain groups with elevated risk scores above a threshold of 20 were targeted for investigation for potential SAR fillings, even though Merrill’s internal analysis showed that groups whose risk scores were below that threshold would likely generate a SAR filing, the SEC order said.
The SEC found that Bank of America and Merrill failed to properly investigate those event groups whose scores were below the 20 threshold, a violation of Section 17(a) of the Securities Exchange Act of 1934. According to the SEC, transactions that were not investigated totaled hundreds of millions of dollars and were often dubious in nature.
“The suspicious activity included, among other things, transfers that appeared to have no apparent economic, business or other lawful purpose, transfers in large, round dollar amounts, transfers to or from designated high-risk geographical locations, cash transactions that appeared to be structured, transactions related to criminal activity, and transactions in accounts of subjects that had been the subjects of prior SARs,” SEC investigators noted.
Merrill did not admit any wrongdoing and agreed to censure and to pay the civil penalty within 14 days. As a means of remediation, Merrill noted it had filed numerous SARs after reviewing transactions that had previously been below its investigative threshold, while BofA engaged a compliance consultant to fully assess the efficiency of its monitoring program.
SAR filings can be triggered by bank activity such as numerous consecutive deposits designed to avoid the $10,000 Currency Transaction Report threshold, unexpectedly large cash deposits or withdrawals, or frequent wire transfers from high-risk countries often associated with financial crimes or terrorist activity.
Bank of America did not respond to The Epoch Times’ request for comment by publication time.
It’s not the first time Bank of America’s global investment arm has run afoul of SAR filing requirements. In 2023, the SEC said Merrill and Bank of America’s parent company BAC North America Holding Co. failed to file hundreds of SAR reports from 2009 through 2019. In that case, Merrill agreed to pay a $6 million civil penalty.
