## Facts

- The United States charged Wachovia Bank, N.A., a federally chartered bank, with willfully failing to maintain an effective anti-money-laundering (AML) program from May 2003 through June 2008.
- Wachovia maintained and expanded correspondent banking relationships with Mexican currency-exchange businesses (casas de cambio), a line of business treated as high risk.
- Law-enforcement and regulatory warnings during 2005–2006 identified casas de cambio as channels used by Mexican drug trafficking organizations to launder proceeds.
- Investigations traced wire transfers used to purchase aircraft for narcotics trafficking back to casas de cambio correspondent accounts held at Wachovia.
- Between 2004 and 2007, nearly $13 million flowed through these accounts tied to aircraft purchases; large cocaine seizures were later associated with those aircraft.
- Government allegations described serious monitoring and reporting failures, including inadequate detection of structured transactions, sequentially numbered traveler’s checks with unusual markings, and bulk activity inconsistent with stated customer expectations.
- The resolution included acknowledgments that more than $110 million in transactions were subject to forfeiture as proceeds involved in unlawful money-laundering activity.

## Issues

1. Whether Wachovia willfully failed to maintain an effective AML program as required by the Bank Secrecy Act, 31 U.S.C. § 5318(h)(1), punishable under 31 U.S.C. § 5322(a).
2. Whether a deferred prosecution resolution with forfeiture, penalties, and remedial compliance obligations was an appropriate disposition for alleged systemic AML failures tied to high-risk correspondent banking.

## Decision

- The government filed a one-count criminal information in March 2010 and, with the filing, entered into a deferred prosecution agreement (DPA) supported by an agreed factual statement.
- Wachovia waived indictment, consented to prosecution by information, and agreed to be bound by the factual statement.
- The court approved the DPA, deferring prosecution subject to Wachovia’s compliance with monetary sanctions and extensive AML remediation and cooperation obligations.
- Wachovia agreed to pay $110 million in forfeiture and a $50 million civil penalty, totaling $160 million.
- After the DPA term was completed, the case was terminated and the information was dismissed on April 6, 2011.

## Legal Principles

- The Bank Secrecy Act requires banks to maintain an effective AML program reasonably designed to detect and report suspicious activity and meet recordkeeping and reporting duties. 31 U.S.C. § 5318(h)(1).
- Willful failure to maintain an effective AML program can be prosecuted criminally under 31 U.S.C. § 5322(a), including where deficiencies persist across a multi-year period in a high-risk business line.
- A DPA may resolve criminal exposure by deferring prosecution in exchange for admissions, cooperation, remediation, and payment of forfeiture and penalties; noncompliance can permit the government to proceed on the filed charging instrument.
- Funds involved in transactions constituting money laundering may be subject to forfeiture under federal forfeiture statutes, including 18 U.S.C. §§ 981 and 982, based on conduct implicating 18 U.S.C. §§ 1956 and 1957.

## Conclusion

The case ended through a court-approved deferred prosecution framework in which Wachovia accepted responsibility for willful AML program failures under the Bank Secrecy Act, paid $160 million in forfeiture and penalties, implemented extensive compliance reforms, and obtained dismissal of the criminal information after completing the agreement’s conditions.


United States v. Wachovia Bank, N.A., No. 1:10-cr-20165-JAL (S.D. Fla. 2010)