A regulatory scandal involving one of America’s largest banks is now raising questions for Canadian investors. Toronto-based law firm Milosevic & Associates PC has launched an investigation into potential shareholder claims against Bank of America following U.S. enforcement actions that resulted in more than US$1.21 billion in financial penalties.
The October 13, 2026, announcement by American regulators exposed serious shortcomings in the bank’s anti-money-laundering controls, including failures to report billions of dollars in suspicious transactions.
Two days later, the Toronto firm announced it was examining whether Canadian investors had been misled about the bank’s efforts to address previously identified compliance problems.
The investigation comes after Bank of America’s Canadian-listed depositary receipts declined sharply, while the company’s latest earnings revealed the financial consequences of the regulatory settlement. The situation has opened a new discussion about corporate disclosure, investor protection and accountability at major financial institutions.
Toronto Law Firm Launches Investigation Into Canadian Shareholder Claims
Milosevic & Associates PC announced its investigation on October 15, 2026, focusing on potential investor claims involving Bank of America Corporation. The Toronto firm specializes in civil fraud litigation and is examining whether investors received accurate information about the bank’s progress in correcting anti-money-laundering deficiencies. The investigation specifically concerns Canadian investors who purchased Bank of America securities during a period when the institution was already under regulatory scrutiny. It follows the announcement of substantial penalties by three U.S. financial regulators.
Toronto lawyer Andrew Morganti, who is involved in the investigation, has questioned whether Bank of America’s previous statements about compliance improvements accurately reflected the problems regulators later identified. The firm is inviting investors who purchased the bank’s securities in Canada, or Canadian residents who acquired its New York-listed securities, between December 23, 2024, and October 13, 2026, to discuss their circumstances. Importantly, an investigation does not establish that Bank of America committed securities fraud. No Canadian court finding or investor compensation award was announced in the firm’s October 15 notice.
U.S. Regulators Impose More Than US$1.21 Billion in Penalties
The U.S. Department of the Treasury announced sweeping enforcement actions against Bank of America on October 13. The Financial Crimes Enforcement Network, known as FinCEN, assessed a US$1.2 billion penalty for violations of anti-money-laundering requirements. The Office of the Comptroller of the Currency separately assessed US$750 million, the largest civil monetary penalty in the agency’s history. The Office of Foreign Assets Control also reached a US$11.66 million settlement with the bank over apparent sanctions violations involving multiple international programs.
The financial breakdown requires an important distinction. FinCEN’s US$1.2 billion assessment credits the US$750 million OCC penalty, meaning the two amounts are not added together as separate payments. Including the sanctions settlement, the combined penalties total approximately US$1.212 billion. Treasury described the action as the third-largest penalty in its history. Officials emphasized that Bank of America’s size made its failures particularly consequential because the institution processes enormous volumes of transactions across international financial markets. The penalties represent a major financial setback, but they also expose compliance weaknesses that regulators say remained unresolved for years.
Regulators Say More Than US$5 Billion in Suspicious Activity Went Unreported
The enforcement action centres on failures to identify, investigate and report suspicious financial activity. According to FinCEN, Bank of America failed to report more than US$5 billion in suspicious transactions in a timely manner. More than US$1 billion involved potential national-security threats or other priority financial-crime risks. Regulators identified suspicious activity associated with Chinese money-laundering networks, possible fraud and trade-based money laundering linked to the southwestern United States border. The findings raised serious concerns about the effectiveness of monitoring systems at one of the country’s largest financial institutions.
Regulators also found that the bank relied excessively on inquiries from law enforcement agencies and other financial institutions rather than consistently identifying suspicious activity through its own systems. In some cases, warning signs remained unresolved for extended periods, reducing the usefulness of reports eventually submitted to authorities. A suspicious transaction does not automatically establish that a crime occurred, but banks are required to investigate and report activity meeting applicable legal thresholds. The distinction is critical: the enforcement action concerns failures in monitoring and reporting obligations, even where the underlying transactions have not all been proven criminal.
A 2024 Regulatory Order Is Central to the Investor Investigation
Bank of America’s compliance problems were not first identified in October 2026. On December 23, 2024, the OCC issued a cease-and-desist order against Bank of America, N.A., the group’s national banking subsidiary. The order identified deficiencies involving suspicious-activity reporting, customer due diligence, internal controls, governance and employee training. The bank agreed to take corrective action, including improving its compliance systems and using independent expertise to evaluate potential reporting failures. Those commitments became an important part of the institution’s subsequent regulatory disclosures.
In its quarterly filing submitted July 31, 2026, Bank of America Corporation stated that it had been working with regulators since late 2023 and had completed significant steps toward satisfying the earlier order. However, the October enforcement announcement said the bank had not made sufficient progress addressing multiple internal-control weaknesses. Morganti argues that the contrasting descriptions raise questions about what investors understood. The July filing also explicitly warned that resolving regulatory inquiries could involve monetary penalties and further remedial measures. Whether the statements were materially misleading, rather than descriptions of incomplete progress, remains a question requiring legal examination.
Nearly 500 Apparent Sanctions Violations Add to the Bank’s Troubles
Beyond shortcomings in anti-money-laundering monitoring, Bank of America agreed to settle potential civil liability for 475 apparent violations of American sanctions programs. The Office of Foreign Assets Control identified transactions involving restrictions related to Russia, Belarus, Iran, Myanmar, Somalia, narcotics trafficking and global terrorism. The problems included payments processed through blocked banks, delays in updating sanctions watchlists and failures to properly prioritize alerts involving individuals whose identifying information matched sanctioned persons. Regulators also identified errors involving business accounts linked to blocked individuals.
The sanctions settlement totalled US$11,662,930. OFAC characterized the apparent violations as non-egregious, although most were not voluntarily self-disclosed. That distinction matters because the settlement involved both technical control failures and weaknesses in how the bank responded to regulatory restrictions. Sanctions screening is essential for international financial institutions, particularly when transactions move across multiple countries and currencies. A delayed system update or improperly handled alert can create regulatory exposure even without evidence that employees deliberately assisted sanctioned individuals. For investors, the additional settlement expands the compliance concerns beyond anti-money-laundering procedures alone.
Bank of America’s Canadian-Listed Securities Drop Sharply
The regulatory announcements were followed by a notable decline in Bank of America’s Canadian-listed depositary receipts. According to the Toronto law firm’s October 15 statement, the securities traded at C$27.02 on October 9 before falling to C$25.54 on October 14. Historical market data confirms those closing prices, representing a decline of approximately 5.5%. The Canadian Depositary Receipts, trading under the symbol BOFA on the Toronto Stock Exchange, allow Canadian investors to gain exposure to Bank of America without directly purchasing its U.S.-listed common shares.
The investment structure is important because Bank of America’s ordinary shares trade under the symbol BAC on the New York Stock Exchange, while the Canadian receipts are issued by CIBC and feature a currency-hedging mechanism. Each receipt represents a fractional economic interest in the underlying shares, with adjustments designed to reduce exposure to exchange-rate fluctuations. On October 14 alone, the Canadian receipts fell approximately 4.95% from the previous close. However, the stock-market reaction reflected both the regulatory announcement and disappointing quarterly financial results. A share-price decline can support an investigation into potential losses, but it does not independently prove that a legally actionable misrepresentation occurred.
The Fine Takes a US$1.2 Billion Bite Out of Quarterly Earnings
Bank of America’s financial results revealed the immediate impact of the regulatory settlement. On October 14, the company reported third-quarter net income of US$6.9 billion, compared with US$8.3 billion during the same quarter in 2025. Earnings fell to US$0.91 per diluted share from US$1.04 a year earlier. The company recorded a regulatory settlement charge of US$1.2 billion, equivalent to US$0.17 per share. Excluding that charge, adjusted earnings were approximately US$8.1 billion, or US$1.08 per share.
The penalty was not the only challenge facing the bank. Quarterly revenue increased approximately 3% to US$30 billion, but sales and trading revenue declined 5%, while fixed-income, currencies and commodities trading revenue dropped 17%. Investment banking fees also weakened. At the same time, net interest income increased 8% to approximately US$16.4 billion, reflecting continued lending and deposit activity. These mixed results illustrate why determining the cause of investor losses can be complicated. Regulators’ findings may have damaged confidence, but the earnings report also contained operating developments capable of influencing the company’s share price.
Bank of America Says It Has Invested Heavily in Compliance Improvements
Bank of America has emphasized that it is taking steps to strengthen its financial-crime compliance operations. During an October 14 analyst briefing, chief financial officer Alastair Borthwick said the institution had already completed substantial work required under its regulatory obligations. Chief executive Brian Moynihan indicated that approximately 1,000 employees had been reassigned to help address compliance weaknesses and improve efficiency. Management also highlighted investments in technology and personnel, arguing that the ongoing costs of remediation were already reflected in the bank’s expense outlook.
Nevertheless, regulators are requiring additional independent scrutiny. The FinCEN agreement obliges the bank to work with an outside party to review historical transactions, identify suspicious activity that may have escaped detection and submit required reports. Independent evaluations must also examine transaction monitoring, customer due diligence and related data-management systems. The consent order does not impose a cap on the bank’s asset growth, according to management. For investors, that means the institution can continue operating and expanding, but its compliance practices remain subject to significant corrective obligations. The effectiveness of those reforms will be an important measure of progress.
What Canadian Securities Law Could Mean for Affected Investors
The Toronto firm’s investigation raises questions about the legal protections available to Canadians who purchased foreign financial securities. Ontario’s Securities Act provides a framework for certain secondary-market claims involving alleged misrepresentations or failures to disclose material changes. Such claims are not automatically established by a regulatory penalty. Plaintiffs generally need to demonstrate that the relevant legal requirements are satisfied, and statutory secondary-market proceedings require permission from the court before they can advance.
The law also contains rules for assessing damages following a public correction of an alleged misrepresentation. Those rules can use trading prices over a period of 10 trading days after the correction, depending on whether and when securities were sold. This is a damages-assessment mechanism, not a universal 10-day deadline for investors to file a claim. Eligibility and potential recovery also depend on the securities purchased, applicable jurisdiction, purchase and sale dates, and the cause of any losses. Canadian residents holding U.S.-listed shares may face different legal considerations from investors holding Canadian depositary receipts. The firm’s investigation has not established compensation rights for either group.
Canada’s TD Bank Scandal Adds Context as Investors Await Answers
The Bank of America investigation follows another major anti-money-laundering enforcement case involving a familiar financial institution. In October 2024, Toronto-Dominion Bank reached coordinated settlements with American authorities involving approximately US$3 billion in penalties. TD’s American banking subsidiaries admitted serious violations, including criminal offences related to money laundering and failures to maintain adequate compliance programs. The comparison is relevant because the Toronto firm’s investigation specifically points to the earlier TD case when questioning whether Bank of America investors received sufficient information about similar regulatory problems.
The cases are not identical. TD’s resolution included criminal guilty pleas, while Bank of America’s October 2026 penalties primarily involved civil regulatory enforcement and a separate sanctions settlement. For Canadian investors, the next developments will concern whether potential securities claims are formally filed, how courts assess any alleged disclosure failures and whether Bank of America’s compliance improvements satisfy regulators. The October 15 announcement marks the beginning of a Canadian-focused investigation, not the conclusion of a lawsuit. The broader lesson concerns transparency: financial institutions must communicate regulatory risks accurately, and shareholders need reliable information to assess those risks before they become costly surprises.
