BIG PUERTO RICO BANK SETTLES U.S. MONEY LAUNDERING CASE

WASHINGTON, Jan. 16 - The Justice Department said today that Banco Popular
de Puerto Rico, the island's largest bank and a company with a major
presence in the continental United States, would pay $21.6 million in
penalties to settle accusations that it laundered millions of dollars in
drug money. Under the agreement, the bank will avoid criminal prosecution.

The deposits, totaling $20 million, were often brought to the Old San Juan
branch of the bank in "paper bags or gym bags filled with
small-denomination bills" from June 1995 to September 1998, legal papers said.

Banco Popular, which is based in San Juan and has 100 branches in the
United States and 200 in Puerto Rico, admitted that it did not file the
"suspicious activity" reports required by federal antilaundering rules, or
filed untimely or inaccurate reports, investigators said.

"Banks are our first defense against money launderers, drug dealers and
even terrorists who would attempt to abuse our financial institutions,"
said Michael Chertoff, an assistant attorney general who heads the Justice
Department's criminal division. "Today's agreement recognizes that Banco
Popular has been forthright in accepting its responsibility."

In a statement, Banco Popular's chief executive, Richard L. Carrion, said,
"It is our firm belief that accepting the agreement is the preferred course
of action - one that avoids potentially protracted litigation that could
have had a negative impact on the bank, our clients, our employees and the
communities we serve.

The Justice Department agreed to delay prosecution for a year and
eventually to recommend dismissing charges if the bank complies fully with
the agreement, which was a result of a four-year investigation.

The bank has branches in 30 states, catering to what Mr. Carrion called -
in 2001 testimony before Congress - the "unbanked segment," which includes
immigrant laborers who regularly send money home. Mr. Carrion is a former
governor of the Federal Reserve Bank of New York.

Investigators with the Internal Revenue Service and the United States
Customs Service said that over a three-year period, Roberto Ferrario Pozzi
and some of his employees deposited about $20 million in small bills at the
bank's Old San Juan branch. The cash, which totaled hundreds of thousands
of dollars each day starting in 1997, was in small bills so the tellers
spent considerable time counting it by hand. This tied up teller lines and
required additional armored car pickups.