WACHOVIA SETTLES MONEY-LAUNDERING CASE

Wachovia Bank reached a $160 million settlement with the Justice
Department over allegations that a failure in bank controls enabled
drug traffickers to launder drug money by transferring money from
Mexican currency-exchange houses to the bank.

Under a deferred-prosecution agreement with federal prosecutors in
Miami, Wachovia, which is owned by Wells Fargo & Co., "admitted
failure to identify, detect, and report suspicious transactions in
third-party payment processor accounts," according to the Justice
Department. Prosecutors said the bank processed $420 billion in
transactions without using proper money-laundering detection.

In a statement, Wachovia said it "has made significant enhancements to
its [anti-money laundering] and [Bank Secrecy Act] compliance program
that have strengthened its ability to guard against unlawful use of
its system by wrongdoers." Wachovia has spent $42 million improving
its compliance program, the bank said.

The currency-exchange houses, known as casas de cambio, serve as a
legitimate method for immigrants to send money to relatives in Latin
America. But authorities in the U.S., Mexico and Colombia have for
years warned that drug-traffickers also use these exchange houses to
launder the proceeds of their trade.

According to the Justice Department, Wachovia accounts took in at
least $373 billion in wire transfers that were made from casas de
cambio in Mexico between May 2004 and May 2007. In addition, more than
$4 billion in bulk cash was shipped from Mexican casas de cambio to
Wachovia accounts, prosecutors allege. Wachovia also operated a
"remote deposit capture" service that took in another $47 billion,
according to prosecutors.

Some of the money was used to buy planes for trafficking, according to
prosecutors. U.S. investigators seized more than 20,000 kilograms of
cocaine from the planes.

Miami U.S. Attorney Jeffrey H. Sloman, whose office led the three-year
probe said, "Wachovia's blatant disregard for our banking laws gave
international cocaine cartels a virtual carte blanche to finance their
operations by laundering at least $110 million in drug proceeds.
Corporate citizens, no matter how big or powerful, must be held
accountable for their actions."

Under the agreement, Wachovia agreed to forfeit $110 million to the
U.S., which the Justice Department said represented proceeds of
illegal narcotics sales that were laundered through Wachovia. It will
also pay a $50 million fine to the U.S. Treasury.