Mar.22, 2010, 14:47:24 EDT

Federal authorities in Miami have filed criminal charges against Wachovia Bank, alleging it failed to block Mexican currency exchange houses from laundering $110 million in drug proceeds through the bank, officials said Wednesday.

Wachovia Bank, a subsidiary of Wells Fargo & Co., will avoid criminal prosecution by agreeing to pay a $50 million fine and forfeit the $110 million, officials said.

The bank must also implement stronger anti-money laundering systems.

Prosecutors with the U.S. attorney's office, along with officials from the Drug Enforcement Administration, plan to hold a news conference Wednesday afternoon on the allegations.

Wachovia, charged with violating the U.S. Bank Secrecy Act, got out of the foreign money-transfer business two years ago.

In a statement published Monday in the Wall Street Journal, Wells Fargo said: "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."

The currency exchange houses in Mexico and other Latin American countries allow U.S. immigrants and international businesses to send money back and forth. But for decades, federal authorities have targeted the casas de cambio as conduits for laundering cocaine and other drug profits for the Mexican and Colombian cartels.

In a related criminal case, federal prosecutors in Miami have charged Casa de Cambio Puebla and four defendants with conspiring to smuggle thousands of kilos of cocaine into the United States and with using the Mexican exchange house to launder the dirty profits.

U.S. District Judge Donald Graham has issued a protective order freezing about $27 million in assets that prosecutors plan to forfeit as part of that criminal case.