Wachovia bank recently reached an agreement with federal prosecutors to settle charges that it allowed drug cartels to launder more than $378 billion through exchange houses it owned in Mexico from 2004 to 2007.
Wachovia, now owned by Wells Fargo, was found to have committed the largest violation of the Bank Secrecy Act in U.S.
Wells Fargo has agreed to pay $160 million in fines and penalties, which represents less than 2% of its 2009 profits.
If Wells Fargo does pay the amount agreed upon, the Justice Department will drop all related charges next March. According to Bloomberg News, No big U.S. bank--Wells Fargo included--has ever been indicted for violating the Bank Secrecy Act or any other federal law.
Instead, the Justice Department settles criminal charges by using deferred-prosecution agreements, in which a bank pays a fine and promises not to break the law again.
Some of the laundered drug money was used to buy DC-9 planes to smuggle drugs into Mexico.
But Wachovia wasn’t the only bank to allow illicit funds to move through its accounts. The aircraft purchases also relied on monies that moved through Bank of America.
And American Express Bank International in Miami has twice been fined for failing to detect drug money filtering through its accounts.
And it’s not just the banks that have profited from drug cartel money. In February, Western Union, which transfers money by wire, agreed to pay $94 million to settle investigations by Arizona’s attorney general.
Monday, July 05, 2010