As reported by the Wall Street Journal, the U.S. Department of Justice and Wachovia Bank have entered into a $160 million settlement and deferred prosecution agreement to settle the DOJ’s allegations that Wachovia enabled drug traffickers to launder drug money through transfers of money from Mexican currency exchange houses to the bank. The bank has agreed to forfeit $110 million to the government and to pay an additional $50 million in fines.
The government alleges that Wachovia failed to use proper money laundering detection and allegedly processed billions in transactions. Currency exchange houses, or casas de cambio, are primarily used as a legitimate means for immigrants to send money to relatives abroad, but authorities have stated that the houses are also used by drug traffickers to launder drug money. The government alleged that Wachovia laundered at least $110 million in drug proceeds, some of which was used to purchase aircraft for use in drug trafficking.
Wachovia released a statement in which the company stated that it had made significant enhancements to its anti-money laundering and Bank Secrecy Act compliance program and its mechanisms for detecting wrongdoing. The bank has spent $42 million to improve its compliance program. On the other hand, the U.S. Attorney’s Office for the Southern District of Florida has stated that Wachovia "blatantly" disregarded banking laws.