The government agreed to defer prosecution on a criminal charge that Wachovia 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.
The casas de cambio, which are not banks, allow people and businesses in Mexico to exchange or wire transfer the value of currency to bank accounts in the U.S. and other countries.
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.
The bank will forfeit $110 million and pay a $50 million fine as part of the settlement in the federal case.
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. 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.
[Source: The Wall Street Journal, AP, BusinessWeek]
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