Wachovia Bank entered a deferred prosecution agreement in March 2010 and paid $160 million — the largest BSA penalty ever imposed at the time — for willfully failing to maintain an AML program from 2003–2008 that allowed over $420 billion in transactions with Mexican currency exchange businesses to process unmonitored, including at least $373 billion in wire transfers and $4 billion in bulk cash tied to drug cartel money laundering.

Wachovia Bank, N.A. — $160 Million BSA/Drug Cartel Money Laundering Deferred Prosecution (2010)

Outcome: Wachovia Bank entered a Deferred Prosecution Agreement with the Department of Justice in March 2010 and paid $160 million — the largest BSA penalty ever imposed against any institution at that time — for willfully failing to maintain an effective AML program from May 2003 through June 2008 that allowed over $420 billion in transactions with Mexican currency exchange businesses (casas de cambio) to process largely unmonitored, facilitating drug cartel money laundering.

Wachovia Bank, N.A., headquartered in Charlotte, North Carolina (acquired by Wells Fargo in 2008 before the resolution), had established an extensive international business processing transactions for Mexican casas de cambio — currency exchange businesses that operated as intermediaries for drug cartel proceeds. From May 2003 through June 2008, Wachovia willfully failed to maintain an AML program that adequately monitored these high-risk relationships, allowing the casas de cambio to use Wachovia as a conduit for laundering drug trafficking proceeds.

The scale of the failures was extraordinary: over $420 billion in financial transactions flowed through Wachovia from these casas de cambio relationships. From May 1, 2004 through May 31, 2007 alone, at least $373 billion in wire transfers moved from the casas de cambio to Wachovia accounts. More than $4 billion in bulk cash was physically transported from Mexico to Wachovia accounts — a type of transaction that should have triggered automatic AML scrutiny but instead processed without adequate review. An additional $47 billion flowed through Wachovia via a remote deposit capture service.

The March 2010 DPA required Wachovia to forfeit $110 million to the United States (representing proceeds of illegal narcotics sales laundered through the bank) and pay a $50 million criminal fine, with the $110 million FinCEN civil money penalty deemed satisfied by the forfeiture. The case set a record at the time and established legal precedent for criminal prosecution of banks that facilitated cartel money laundering through willful AML program failures.

Primary Source: DOJ Press Release — Wachovia Bank Deferred Prosecution Agreement (March 2010)