Money launderers for ruthless Mexican drug gangs long have had a formidable ally: international banks.
Despite strict rules set by international regulatory bodies that require banks to “know their customer,” inquire about the source of large cash deposits and report suspicious activity, they have failed to do so in many high-profile cases and instead have allowed billions in dirty money to be laundered.
And those who want to stop cartels from easily moving money express concern that guilty banks get off with a slap on the wrist.
Wachovia last year agreed to pay $160 million in forfeitures and fines after U.S. prosecutors accused the banking powerhouse of “willfully” overlooking the suspicious character of more than $420 billion in transactions between the bank and Mexican currency-exchange houses — much of it probably drug money, investigators say.
Wachovia was moving money through wire transfers, traveler’s checks, even large hauls of bulk cash, investigators said. Some money was traced to purchases of small airplanes used to smuggle cocaine from South America to Mexico, they said.
“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” U.S. Attorney Jeffrey Sloman said last year.
Wachovia paid the $160 million in what is called a deferred-prosecution deal; no one went to prison, and the fines were a tiny fraction of the money the bank had filtered. Wachovia acknowledged serious lapses.
In a similar case, U.S. regulators are monitoring HSBC Bank after a probe last year focused on bulk cash that its U.S. branch received from Mexican exchange houses, money suspected to be drug proceeds.
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