Mar.16, 2010

Wachovia, now part of Wells Fargo & Co., is in discussions with the U.S. Justice Department to resolve an investigation into the bank's ties to Mexican money exchange houses and its compliance with money-laundering laws.

San Francisco-based Wells, which bought Charlotte's Wachovia in 2008, disclosed the negotiations last month in its annual report.

Wells said it's cooperating with the probe led by the U.S. Attorney's Office in Miami and is discussing paying penalties and entering into agreements about its future conduct.

The Wall Street Journal reported Monday that a settlement could come within weeks.

The Journal said the probe involves the role that a Wachovia unit played in processing illegal money transfers for the exchange houses, which are known as "casas de cambio."

The exchange houses are part of the international remittance business that allows immigrants to send money home to Mexico.

But federal officials also have targeted the outfits as a way for drug traffickers to transfer cash, the Journal reported.

The investigation first came to light in April 2008, part of a rash of bad news at the bank that preceded the ouster of former chief executive Ken Thompson in June 2008.

Wells Fargo agreed to buy Wachovia in the fall of 2008 at the peak of the nation's financial crisis.

Wells Fargo spokeswoman Mary Eshet noted the investigation involves matters that occurred before the merger and that Wells has continued to cooperate with the government.

"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 organization," she said.

Wachovia decided to stop doing business with the exchange houses in 2007 and exited the relationships in early 2008.