Big Bank Ignored Warnings That It Was Being Used To Launder Money By Mexican Drug Cartels

http://thinkprogress.org/2011/04/20/wachovia-banks-drug-cartels/

By Andrea Nill on Apr 20th, 2011 at 5:31 pm

One year ago, Bloomberg News reported that Wachovia Corp. — one of the biggest banks in the U.S. — “had made a habit of helping move money for Mexican drug smugglers.” Wells Fargo & Co., which acquired Wachovia a couple of years ago, admitted in 2010 that it “failed to monitor and report suspected money laundering by narcotics traffickers — including the cash used to buy four planes that shipped a total of 22 tons of cocaine.” The case was later settled for about $110 million and Wachovia paid another $50 million in fines for failing to properly monitor the transfer of $378.4 billion from currency exchange houses in Mexico. The charges were dismissed.

It turns out, Wachovia had been receiving warnings for years from a senior anti-money laundering officer in its own London office, Martin Woods. Yet, Woods’ words of caution weren’t only met with indifference. Wachovia reportedly retaliated against Woods and essentially drove him out of his job. The Observer recently reported:

Rather than launch an internal investigation into Woods’s alerts over Mexico, Woods claims Wachovia hung its own money-laundering expert out to dry. [...] On 16 June Woods was told by Wachovia’s head of compliance that his latest SAR [suspicious activity report] need not have been filed, that he had no legal requirement to investigate an overseas case and no right of access to documents held overseas from Britain, even if they were held by Wachovia. [...]

“Wachovia had my résumé, they knew who I was,” says Woods. “But they did not want to know – their attitude was, ‘Why are you doing this?’ They should have been on my side, because they were compliance people, not commercial people. But really they were commercial people all along. We’re talking about hundreds of millions of dollars. This is the biggest money-laundering scandal of our time.

At some point, Woods received a letter from the bank’s compliance managing director which accused him of failing “to perform at an acceptable standard.” In 2008, Woods sued Wachovia for bullying and detrimental treatment of a whistleblower. Wachovia settled that case too and agreed to pay an undisclosed amount under the condition that Woods leave the bank.

To this day, not a single bank has been indicted for violating the anti-money-laundering Bank Secrecy Act. Meanwhile, foreign government agencies in the United Kingdom, Mexico, and Colombia, along with the United Nations Office on Drugs and Crime have all reportedly documented money laundering by the banking industry. According to Al Día, financial institutions such as Bank of America, American Express, Western Union, the Mexican offices of Citigroup, the European HSBC and Banco Santander have all “helped move money for Mexican cartels.”

Meanwhile, the drug war has claimed the lives of at least 35,000 people since 2006 in Mexico alone. Senior U.S. commanders told the Senate Armed Services Committee last week that Mexico and Central America make up one of the most dangerous regions in the world, rivaling the conflicts in Iraq and Afghanistan. And as the U.S. continues to pour millions of dollars into fighting the drug war in Mexico, U.S. drug users contribute approximately $40 billion a year to Latin American cartels — money which apparently often ends up passing through U.S. banks.
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