Wachovia, one of the world’s largest international banks, is still defending itself against the Florida civil complaint described at my post "Lawsuit Claims Wachovia Bank Facilitated Alleged Ponzi Scheme".  The complaint essentially claims that Wachovia’s anti-money laundering program under the Bank Secrecy Act had failed to detect money laundering.  It was brought by the apparent victims of a Ponzi-like securities fraud.

Although the complaint could conceivably be the subject of a trial, the Court might soon dismiss at least part of it.  This might happen since there is no private right of action under the Bank Secrecy Act for alleged anti-money laundering program violations.  Only governmental authorities can seek monetary damages for Bank Secrecy Act violations, as suggested by pages 77-78 of the August 26, 2009 opinion in Armstrong v. American Pallet Leasing, Inc.



Wachovia in the meantime, agreed last month to forfeit $110 million and pay an additional $50 million dollars to governmental authorities.  The payment was to settle the government’s claim that Wachovia had numerous lapses in its anti-money laundering program under the Bank Secrecy Act.  E.g. 31 U.S.C. §§5318 (h) (1) (requiring anti-money laundering programs) & 5322 (a) (criminal penalties).  The FinCen Financial Intelligence Unit outlined these alleged lapses in its March 12, 2010 "Assessment Of Civil Money Penalty". 

According to the March 12th assessment, Wachovia had been accused of failing to: make suspicious activity reports pursuant to 31 U.S.C. §5318 (g), file currency transaction reports, monitor bulk cash deposits, etc.   Subsequent to the assessment, Wachovia entered into the deferred prosecution agreement mentioned by the U.S. Department of Justice in its March 17, 2010 press release

This deferred prosecution agreement included a "factual statement" which explained at Page 6:  "The violations at Wachovia were serious and systemic and allowed certain Wachovia customers to launder millions of dollars of proceeds from the sale of illegal narcotics through Wachovia accounts over an extended time period."

Copyright 2010 Fred L. Abrams