MIAMI — Banking giant Wachovia Corp. will pay $160 million to settle a federal investigation into laundering of illegal drug profits through Mexican exchange houses in the largest case of its kind ever brought against a US bank, prosecutors said yesterday.
“This is historic,” acting US Attorney Jeffrey Sloman said. “There is no other case like this one anywhere.”
The probe, which began in 2005 when a Drug Enforcement Administration narcotics dog in Florida detected cocaine traces in an airplane, ultimately uncovered at least $110 million in drug profits laundered from Mexico through Wachovia. The total settlement includes forfeiture in that amount plus a $50 million fine.
The agreement means Wachovia and its executives will avoid criminal prosecution in return for the $160 million payment and significant improvements in its antimoney-laundering program. If those and other conditions are met within one year, potential criminal charges for failure to maintain a system to detect money launderers will be dropped.
Wachovia, now a unit of San Francisco-based Wells Fargo & Co., said in a statement that Wells Fargo had already set aside money to pay the settlement. The statement said Wachovia, based in Charlotte, ended its relationships with foreign currency exchange houses in 2008.