Drug cartels used Wachovia Bank to launder money through Mexican exchange houses. Wachovia to Pay $160 Million to End Money Laundering Probe
Wells Fargo & Co.’s Wachovia Bank agreed to pay $160 million to resolve a criminal investigation of how drug cartels used the bank to launder money through Mexican exchange houses.
The government agreed to defer prosecution on a criminal charge that Wachovia, once the fourth-largest U.S. bank, failed to set up an effective anti-money laundering program from 2003 to 2008. Wachovia admitted failing to monitor $420 billion in transactions through exchange houses, known as casas de cambio.
Wachovia admitted “serious and systemic” violations of the Bank Secrecy Act that let drug cartels launder at least $110 million through exchange houses. Drug dealers used Wachovia accounts to buy airplanes, and U.S. authorities seized “at least four” of those aircraft with more than 20,000 kilograms in cocaine, Wachovia admitted in U.S. District Court in Miami.
“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations while laundering at least $110 million in drug proceeds,” Jeffrey Sloman, U.S. attorney for the Southern District of Florida, said yesterday at a Miami news conference.
The violations were the largest ever of the Bank Secrecy Act, which is designed to curb money laundering, authorities said. Wells Fargo, based in San Francisco, bought Charlotte, North Carolina-based Wachovia Corp. at the end of 2008.
“This was a systemic breakdown at Wachovia which allowed approximately $420 billion to go unmonitored,” Sloman said.
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