Wachovia settles money-laundering inquiry for $160 million
Banking giant Wachovia Corp. will pay $160 million to settle a federal investigation into laundering of illegal drug profits through Mexican exchange houses in the largest case of its kind ever brought against a U.S. bank, prosecutors said Wednesday.
"This is historic," acting U.S. Attorney Jeffrey Sloman said.
"There is no other case like this one anywhere."
The investigation, which began in 2005 when a Drug Enforcement Administration narcotics dog in Florida detected cocaine traces in an airplane, ultimately uncovered at least $110 million in drug profits laundered from Mexico through Wachovia. The total settlement includes forfeiture in that amount plus a $50 million fine.
The agreement means Wachovia and its executives will avoid criminal prosecution in return for the $160 million payment and significant improvements in its anti-money laundering program guaranteed unsecured personal loan. If those and other conditions are met within one year, potential criminal charges for failure to maintain a system to detect money launderers will be dropped.
Wachovia, now a unit of San Francisco-based Wells Fargo & Co., said in a statement that Wells Fargo had already set aside money to pay the settlement. The statement said Wachovia, based in Charlotte, ended its relationships with foreign currency exchange houses in 2008.
Filed under: finance by Specialist