The Guardian has an alarming story detailing the central role that Wachovia played in money laundering for Mexico’s lucrative drug trade.The newspaper’s investigation shows how the bank – now owned by Wells Fargo – moved $378.4 billion from powerful drug cartels into currency exchange houses in Mexico. That’s one-third of Mexico’s annual GDP.
The authorities uncovered billions of dollars in wire transfers, traveller’s cheques and cash shipments through Mexican exchanges into Wachovia accounts. Wachovia was put under immediate investigation for failing to maintain an effective anti-money laundering programme. Of special significance was that the period concerned began in 2004, which coincided with the first escalation of violence along the US-Mexico border that ignited the current drugs war.
Criminal proceedings were brought against Wachovia, though not against any individual, but the case never came to court. In March 2010, Wachovia settled the biggest action brought under the US bank secrecy act, through the US district court in Miami. Now that the year’s “deferred prosecution” has expired, the bank is in effect in the clear. It paid federal authorities $110m in forfeiture, for allowing transactions later proved to be connected to drug smuggling, and incurred a $50m fine for failing to monitor cash used to ship 22 tons of cocaine.
As The Guardian points out, this case is likely just the tip of a massive iceberg, illustrating the key role that the international banking sector plays in the multi-billion drug trafficking industry.
The whole story is worth reading.
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