AML and BSA Civil Penalties Under FinCEN Enforcement

FinCEN civil penalties for Bank Secrecy Act violations run from $1,430 for a single negligent failure up to $286,184 per willful violation, with certain due-diligence and FBAR penalties reaching into the millions. The Financial Crimes Enforcement Network, a bureau of the U.S. Treasury, assesses these penalties against banks, casinos, money service businesses, and other covered institutions, and against individual officers and employees who participate in a violation.¹ The dollar caps adjust for inflation each year; the figures below took effect January 17, 2025.²

The Negligent and Willful Tiers

The statute at 31 U.S.C. § 5321 sorts BSA violations into two categories, and the gap between them is enormous.³

A negligent violation is a failure to exercise reasonable care with no intent to break the law. The cap is $1,430 per violation. If FinCEN finds a pattern of negligent conduct rather than an isolated slip, the cap rises to $111,308.²

A willful violation carries much more. General willful BSA violations run from $71,545 to $286,184 per violation. Violations of due-diligence requirements, correspondent banking prohibitions, or special measures under 31 U.S.C. § 5318 reach $1,776,364 per violation.² FinCEN reads “willful” broadly. Intentional disregard of a known duty clearly qualifies, and so do reckless disregard and willful blindness. An officer who ignores obvious red flags can be found willful even without proof of intent to violate the law.

How the Numbers Multiply

The caps above are per violation, and each missed report, inaccurate filing, or failed control point is a separate violation. Penalties also stack by time: each day a violation continues can be treated as a separate offense. At an institution processing high volumes of transactions, that arithmetic is how enforcement actions reach hundreds of millions or more. In October 2024, FinCEN entered a $1.3 billion consent order against TD Bank, finding the bank had failed to maintain transaction monitoring that kept pace with its growth, failed to file thousands of accurate currency transaction reports, and failed to file suspicious activity reports on transactions with no apparent lawful purpose.⁴

Reports That Generate Most Penalties

Most FinCEN actions center on failures tied to a small set of required reports and records.

Currency Transaction Reports

Financial institutions must file a Currency Transaction Report for any cash transaction exceeding $10,000 in a single business day.⁵ Each missed or inaccurate CTR is a separate violation and drops into the negligent or willful tier depending on the conduct behind it. In the TD Bank matter, FinCEN found that employees had been trained to process transactions in ways that avoided triggering CTR requirements, which pushed the case squarely into willful territory.⁴

Suspicious Activity Reports

Under 31 U.S.C. § 5318(g), Treasury can require financial institutions to report any suspicious transaction relevant to a possible violation of law.⁶ Banks must file SARs for transactions of $5,000 or more when they know, suspect, or have reason to suspect the funds involve illegal activity. This is the area where FinCEN most aggressively pursues willful penalties, because a missed SAR usually means either the monitoring system failed or someone chose not to act on what it flagged.

Foreign Bank Account Reports

U.S. persons who hold foreign financial accounts must report them when combined balances exceed $10,000 at any point during the year.⁷ FBAR penalties run on their own schedule:

Non-willful: up to $16,536 per violation.²
Willful: the greater of $165,353 or 50 percent of the account balance at the time of the violation.³²
Reasonable-cause exception: no penalty applies if the failure was due to reasonable cause and the balance was properly reported.³

The 50-percent-of-balance calculation is what makes willful FBAR exposure severe for individuals. Someone with $2 million in unreported foreign accounts faces a potential penalty of $1 million per violation, not $165,353.

Recordkeeping

All records required under the BSA must be retained for five years and stored so they can be retrieved within a reasonable time.⁸ Recordkeeping failures usually surface alongside reporting violations because investigators cannot reconstruct the transaction history, and the two sets of penalties compound.

Beneficial Ownership Information Penalties

The Corporate Transparency Act added a separate penalty framework for beneficial ownership information filed with FinCEN. Civil penalties run up to $606 per day for each day the violation continues or remains uncorrected, adjusted for inflation from a statutory base of $500.² Willful violations can also draw criminal fines up to $10,000 and imprisonment up to two years, covering willful false filings, willful failures to file, and willful failures to correct previously reported information.⁹ Senior officers can be held personally liable.¹⁰

A safe harbor exists: if you file a BOI report and later realize it contains inaccurate information, you can submit a corrected report within 90 days of the original filing deadline without facing civil or criminal penalties.⁹ It does not protect anyone who filed inaccurate information on purpose to evade the reporting requirement.

How FinCEN Sets the Number

FinCEN does not automatically apply the maximum. Its Enforcement Statement of Policy weighs a set of factors that give the agency wide discretion within the statutory caps.¹¹ The main ones:

Nature and seriousness of the violations, including dollar amounts involved and harm to the public.
Impact on FinCEN’s mission, particularly whether the failures let illicit funds move through the system undetected.
Pervasiveness: an isolated employee versus a broader institutional culture, and whether management knew or condoned it.
Prior violation history.
Financial gain to the institution, such as keeping a high-volume customer it should have exited.
Self-disclosure and remediation.
Cooperation with the investigation, including producing records and helping identify individual wrongdoers.
How systemic the failures were, measured by number, duration, and failure rates relative to total transactions.
Whether another regulator has already penalized the same conduct, so FinCEN can avoid excessive double punishment.

Self-disclosure matters more than most institutions treat it. FinCEN gives significant weight to an institution that identifies a compliance failure internally and reports it before investigators find it, even when the underlying failure is serious. Waiting for FinCEN to surface the problem almost always results in a larger assessment.¹¹

Individual and Officer Liability

Under 31 U.S.C. § 5321(a)(1), FinCEN can assess civil penalties against any partner, director, officer, or employee who participates in a violation.³ Individual actions typically target compliance officers or executives who knew about red flags and did not act, or who obstructed required filings. Because FinCEN’s willfulness standard includes reckless disregard, an officer does not need to have intended to violate the law to face personal liability. An individual found liable for a willful violation faces the same range as the institution: $71,545 to $286,184 per violation.²

When BSA Violations Cross Into Criminal

Civil penalties do not preclude criminal charges. Willful BSA violations can be prosecuted under 31 U.S.C. § 5322, and the exposure escalates:

Standard willful violation: up to $250,000 in fines, up to five years in prison, or both.¹²
Violation tied to other illegal activity involving more than $100,000 in a 12-month period: up to $500,000 in fines, up to 10 years in prison, or both.¹²
Profit disgorgement: a convicted person forfeits any profit from the violation, and an officer or employee of a financial institution must repay any bonus received during the year of the violation or the following year.¹²
Violations of due-diligence requirements or special measures under § 5318: a separate criminal fine of at least double the transaction amount, up to $1,000,000.¹²

Time Limits and Challenging a Penalty

FinCEN must assess a civil penalty within six years of the underlying transaction. Once assessed, the government has two years to file a civil action to collect it, measured from the later of the assessment date or the date any related criminal judgment becomes final.³

An institution or individual who believes a penalty was wrongly assessed can challenge the final agency action in federal court under the Administrative Procedure Act. Courts review factual findings and penalty calculations deferentially, asking whether FinCEN examined the relevant evidence and gave a satisfactory explanation. Legal questions, including statutory interpretation, may be reviewed without deference. Review is generally confined to the existing administrative record. The successful challenges tend to involve misapplication of the statute, procedural failures, or factual errors in the penalty calculation. If you receive a notice of proposed penalty, the response window is short and the administrative process moves quickly, so getting counsel involved early matters.

1
U.S. Department of the Treasury. Treasury Order 180-01 – Financial Crimes Enforcement Network
2
eCFR. 31 CFR 1010.821 – Penalty Adjustment and Table
3
Office of the Law Revision Counsel. 31 USC 5321 – Civil Penalties
4
Financial Crimes Enforcement Network. FinCEN TD Bank Consent Order, Number 2024-02
5
Office of the Law Revision Counsel. 31 USC 5313 – Reports on Domestic Coins and Currency Transactions
6
Office of the Law Revision Counsel. 31 USC 5318 – Compliance, Exemptions, and Summons Authority
7
Office of the Law Revision Counsel. 31 USC 5314 – Records and Reports on Foreign Financial Agency Transactions
8
eCFR. 31 CFR 1010.430 – Nature of Records and Retention Period
9
Office of the Law Revision Counsel. 31 USC 5336 – Beneficial Ownership Information Reporting
10
Financial Crimes Enforcement Network. Beneficial Ownership Information Frequently Asked Questions
11
Financial Crimes Enforcement Network. FinCEN Enforcement Statement
12
Office of the Law Revision Counsel. 31 USC 5322 – Criminal Penalties