Bank In the US Agrees To Settle Drug Cartel Money Laundering Case
By: Ainsley Brown
Wachovia bank has agreed to pay $160 million to US authorities in order to settle charges brought against it. The bank was accused by the US Justice Department and banking regulators of not having sufficient controls in place to prevent Mexican drug cartels from laundering millions of dollars through the bank using exchange houses –casas de cambio – that dot the US-Mexican boarder.
The Justice Department have agreed to stay the charges against Wachovia for 12 months, provided the bank fulfill its obligations under the settlement. A key plank of this agreement is for Wachovia to hand over the proceeds of narcotics sales being held in its coffers – $110 million – and it must also pay a $50 million fine to the US Treasury.
How did Wachovia find itself in this situation?
With the ratcheting up of the drug trade and its related violence along the US-Mexican border there were growing concerns by many banks in the US for the potential for money laundering. To address these concerns many of the banks either or both put in place additional monitoring procedures or curtailed their dealings with the casas de cambio. However, this was not the case with Wachovia. Between 2004-2007, while other banks were pulling back from their dealings with the boarder exchanges, Wachovia increased its.
It is worthy of note that since its acquisition in 2008 by Wells Fargo, Wachovia has ended its dealing with the exchanges.
