United States v. Wachovia Bank

In June 2005, various federal agencies began investigating wire transfers from the United States sent to drug-trafficking organizations in Mexico to purchase airplanes for narcotics trafficking. The wire transfers were traced to bank accounts at the Miami office of Wachovia Bank (defendant). The bank accounts were held by Mexican currency-exchange houses, organizations that changed United States dollars to Mexican pesos. Wachovia offered three services to the currency-exchange houses: wire transfers, to transfer funds from the United States to Mexico; bulk cash exchange, in which Wachovia would collect dollars in Mexico and transport the cash to the United States; and remote capture deposit to electronically deposit checks. The federal agencies found several red flags that indicated that Wachovia should have been aware of the money-laundering scheme used by the drug-trafficking organizations, including the fact that individuals making wire transfers through Wachovia used fake identities, and that sequentially numbered checks were deposited into Wachovia accounts. In total, over $110 million in drug funds were laundered through Wachovia. The United States government (plaintiff) charged Wachovia with failing to maintain an effective anti-money-laundering program in violation of the Bank Secrecy Act of 1970. The government proposed a deferred-prosecution agreement, through which the charges against Wachovia would be dropped if Wachovia complied with the terms of the agreement. The proposed deferred-prosecution agreement required Wachovia to audit its transactions with the currency-exchange houses, implement new compliance programs to prevent money laundering, pay a forfeiture claim of $110 million, and pay a fine of $50 million.