Archive for March 20th, 2010

U.S. Prosecutors claim Mexican drug cartels laundered hundreds or even billions of dollars through one of the largest banks in the United States. For four years, between May 2003 and May 2007, Wachovia Bank traded with Mexican exchange houses which served the laundering of drug trafficking groups.

The Justice Department claims that Wachovia traded well over $350 Billion with Mexican "casas de cambio” (currency- exchange houses) between 2004 and 2007. These exchange houses are used by “immigrants” to send money back to Latin American but prosecutors claim drug cartels also use these same facilities to laundry and transfer their own money. Prosecutors further claim Wachovia transferred over $4 Billion in bulk cash from foreign Latin exchanges to Wachovia accounts in the U.S.

Prosecutors claimed the Bank does not have proper controls in place to prevent the use of these money exchanges for illegal activity. The Lead Prosecutor in Miami U.S. Attorney Jeffrey H. Sloman actually stated Wachovia blatantly disregarded the banking laws:

"Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations by laundering at least $110 million in drug proceeds. Corporate citizens, no matter how big or powerful, must be held accountable for their actions."

The $160 million fine represents the biggest penalty ever imposed under the Bank Secrecy Act, which requires financial institutions to carefully track transactions to detect suspicious activity. Wachovia has agreed to pay $110 million which constitutes the profits from these transactions and $50 million in fines while the actual prosecution has been delayed for 12 months while Wachovia meets it’s obligations under the settlement.

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