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Apr-26-2008Wachovia faces money-laundering probe: report(topic overview)
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The bank is being investigated by prosecutors as part of a probe into alleged drug money laundering by Mexican and Colombian money-transfer companies, according to the Wall Street Journal. [1] The investigation is "part of a broad probe of alleged laundering of drug proceeds by Mexican and Colombian money-transfer companies," according to The Wall Street Journal (subscription required). Several companies with accounts that have been seized claim to be legitimate businesses and that if they cannot get at their funds, they may go out of business.[2]
WASHINGTON (AFP) — U.S. justice authorities are investigating Wachovia Corp, one of the top five U.S. banks, as part of a probe into Latin American drug money laundering, the Wall Street Journal reported Saturday.[3] U.S. authorities suspected the money was the laundered funds of a drugs syndicate. The probe into Wachovia is part of a larger investigation into money laundering by drug cartels through the money transfer firms that involves both U.S. and Mexican authorities. The Journal said both Union Bank of California and American Express Bank International have paid authorities multi-million-dollar penalties as part of laundering investigations and charges that they fail to implement effective anti-money-laundering programs.[3]
WASHINGTON -- Federal prosecutors are investigating Wachovia Corp. as part of a broad probe of alleged laundering of drug proceeds by Mexican and Colombian money-transfer companies, according to people familiar with the matter. Wachovia is one of several large U.S. banks that have come under scrutiny for their relationships with such companies. It is in discussions with the Justice Department about reforms in its compliance system and faces a possible deferred-prosecution agreement that would require extensive federal oversight.[4] Wachovia is one a several large U.S. banks being examined for relations with Mexican and Colombian money-transfer and foreign exchange firms directly involved in the laundering, the Journal said.[3]
A Wachovia ( WB, Fortune 500 ) official said the bank is cooperating in the probe, which is also scrutinizing several other large U.S. banks, according to the newspaper. The bank severed its ties to these money transfer firms in December and January, when the investigation began. The industry charges high fees to transfer these funds.[1]
The probe comes at a difficult time for the bank, which announced on Friday that it will pay $144 million to settle federal charges that it failed to stop telemarketers from taking advantage of thousands of elderly consumers. On April 14, the North Carolina-based bank posted a $350 million loss in the first quarter - its first quarterly loss since 2001.[1] Regulators said on Friday that Wachovia has agreed to pay as much as $144 million to settle allegations it failed to help consumers who fell prey to schemes operated by telemarketers that maintained accounts at the bank. Wachovia this month posted a surprise first-quarter loss as credit problems from mortgages and other debt soared.[5]
Court papers show federal agents seized more than $11 million in 23 Wachovia accounts belonging to Casa de Cambio Puebla, a Mexican foreign exchange chain, alleging the money belonged to a drug cartel.[6] "Internal emails and documents filed in federal courts in Miami, Chicago and New York describe former ties between Wachovia and money-changing firms," the Journal said. It said Miami court documents show that U.S. agents have seized over 11 million dollars in 23 Wachovia accounts that belonged to the Mexican chain Casa de Cambio Puebla.[3]
CHARLOTTE, N.C., April 26 (UPI) -- U.S. investigators are looking into the role of Wachovia Corp. in an alleged money laundering scheme involving Mexican and Colombian drug money, officials said.[6] The open question is whether Wachovia employees knew about the transactions. It is hard to imagine a well-run bank like Wachovia would be involved in such blatant aid to drug operations from outside the U.S. Perhaps that is why its shares are down almost 50% this year.[2]
Wachovia is one of several large banks being investigated for relationships with the money-transfer companies, the Journal said.[5] Wachovia officials are cooperating with the investigation, the Journal reported, citing spokeswoman Christy Phillips-Brown as saying "Wachovia is committed to maintaining a strong anti-money-laundering program."[3] The news about Wachovia came one day after it agreed to pay 144 million dollars in fines and claims after an investigation into telemarketing fraud that involved the use of Wachovia customers' accounts.[3]
An official of Charlotte, North Carolina-based Wachovia, the country's fourth largest banking firm, said the company is cooperating with the probe, the newspaper said. The Journal attributed its information about the probe to "people familiar with the matter." [5] The newspaper said Wachovia and the other banks severed ties with the Mexican foreign-exchange firms in December and January after inquiries began.[6]
The Feds are looking into whether drug money was laundered by Wachovia (NYSE: WB ).[2]
SOURCES
1. Feds look at Wachovia in drug money probe - Apr. 26, 2008
2. A little drug money laundering at Wachovia? - BloggingStocks
3. AFP: Wachovia probed over drug-money laundering: report
4. Free Preview - WSJ.com
5. Wachovia part of probe into Latin drug money: report | Markets | Bonds News | Reuters
6. Wachovia caught in money-laundering probe - UPI.com
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