Agricultural Bank of China, one of the country’s largest banks, agreed to pay a $215 million penalty Friday to resolve allegations by New York’s banking regulator that the lender violated anti-money-laundering laws.

The New York Department of Financial Services accused the bank of deliberately disguising transactions routed through its New York office that could have hidden laundering of illicit funds or violations of U.S. sanctions laws. Officials at the bank obfuscated U.S.-dollar transactions and failed to update the bank’s...