Wells Fargo set to settle money-laundering case

Wells Fargo, the US bank in which the investment guru Warren Buffett is the biggest shareholder, is close to settling claims that lapses in anti-money laundering controls allowed Mexico's ruthless drug cartels to get cash into and out of the country.

Talks with the US Department of Justice are aimed at ending a controversy that made headlines when a whistleblower in the London office of the Wells Fargo subsidiary Wachovia claimed he had been demoted for raising his concerns.

Martin Woods said in a filing to an employment tribunal last year that in 2006 he began noticing suspicious numbers of large travellers cheques arriving at his office for processing from the Mexican currency exchanges with which Wachovia dealt.

These exchanges, known as casas de cambio, are used throughout Mexico and the border towns of the US by citizens working abroad to transfer cash, but US authorities believe that drug gangs have also been using the system.

The activities predate Wells Fargo's ownership of Wachovia. It acquired the bank during the financial panic of 2008. Wachovia ended its relationship as a "correspondent bank" for the casas de cambio two years ago, a year after the US Drug Enforcement Agency raided one of the exchange's offices and discovered evidence that the Sinaloa drug cartel had used it for buying aeroplanes used for transporting cocaine.

Mr Woods, who was UK compliance officer for Wachovia, said in his employment tribunal filing that he feared for his life because, after he raised his suspicions, the travellers cheques abruptly stopped being routed through London. Wachovia denied his claim that colleagues may have tipped off the Mexican exchanges, and also denied obstructing anti-money laundering efforts. The case was settled, and both sides agreed not to discuss the matter further.

The separate Justice Department investigation has been going on for three years, with authorities based in Florida examining whether Wachovia complied with anti-money laundering rules. The bank said it has been co-operating fully with the investigation throughout, and yesterday it issued a new statement in response to speculation that a settlement is likely soon.

"We look forward to resolving this issue, and are committed to maintaining compliant and effective anti-money laundering policies and practices, and a strong compliance and risk management culture across the integrated organisation," a spokesman said.

The bank told shareholders last month that it expects to have to pay significant financial penalties, and will also have to enter into a legal agreement on its future conduct. In previous cases against other banks, where regulators have found lapses in money laundering protections, fines have run into tens of millions of dollars.

Mexican drug cartels control most of the supply of cocaine and crystal meth into the US market, an export business that is estimated at $25bn-$40bn a year. Despite this, US authorities have seized barely $16m in cartel assets in the past decade. Drug money pervades many aspects of the Mexican economy, and US authorities believe that businesses which are enlisted to aid money laundering can expect to take a cut of 3-8 per cent. Associates sometimes make thousands of tiny deposits in their bank accounts to avoid raising suspicion from banking authorities, a practice known as "smurfing".

peopleFrankie Boyle responds to referendum result in characteristically offensive style
Life and Style
Couples have been having sex less in 2014, according to a new survey
New Articles
i100... with this review
Holly's review of Peterborough's Pizza Express quickly went viral on social media
footballTim Sherwood: This might be th match to wake up Manchester City
Arts and Entertainment
musicHow female vocalists are now writing their own hits
New Articles
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
Blahnik says: 'I think I understand the English more than they do themselves'
Arts and Entertainment
Michelle Dockery as Lady Mary Crawley in Downton Abbey
TVInside Downton Abbey series 5
Life and Style
The term 'normcore' was given the oxygen of publicity by New York magazine during the autumn/winter shows in Paris in February
fashionWhen is a trend a non-trend? When it's Normcore, since you ask
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam