Wachovia Admits It Laundered Millions in Mexican Drug Cash

By Tim Elfrink
Miami New Times
Mar. 20, 2010

Wachovia bank executives have admitted that the banking giant laundered millions of dollars for Mexican drug lords between 2003 and 2008, prosecutors announced in Miami this afternoon.

The bank has promised to pay $160 million in fines and penalties and to set up new safeguards within a year to prevent drug money from coming through the bank.

If it fails in that effort, Wachovia could face criminal charges, says Jeffrey Sloman, U.S. Attorney for the Southern District.

"Wachovia's blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations," Sloman said at a meeting in downtown Miami. "[They] laundered at least $110 million in drug proceeds."

The feds built a case against Wachovia around the bank's relationship with Mexican exchange banks called CDCs (or casas de cambio).

Wachovia execs knew as early as 1996 that the Mexican CDCs were hot spots for drug money but kept doing business with them anyway, Sloman says.

The American bank routed billions of dollars in the past ten years through the CDCs without any effective oversight into where the cash was coming from.

Prosecutors were able to trace some of that money to the purchase of several airplanes used in drug runs, which led to more than 20,000 kilos of cocaine being seized by investigators.

Under an agreement signed by federal Judge Joan Leonard this afternoon, Wachovia will forfeit $110 million in illegal proceeds from drug sales and pay an additional $50 million fine.