Report: U.S. Banks Laundered Mexican Drug Money

In a meeting in Mexico last March, Obama administration officials acknowledged that Americans' insatiable appetite for illegal narcotics is at the core of Mexico's drug war. But it isn't only the habits of some U.S. consumers that are keeping Mexican drug cartels in business.

In April, Mexican soldiers searched a DC-9 jet that had landed at the international airport in the port city of Ciudad del Carmen, 500 miles east of Mexico City. On the plane they found 128 black suitcases, packed with 5.7 tons of cocaine, valued at $100 million.

Law-enforcement officials later also discovered something else. The smugglers had bought the DC-9 with laundered funds they transferred through two of America's biggest banks: Wachovia and Bank of America (BAC), Bloomberg Markets reports in its August issue.

"Blatant Disregard"

It wasn't the first time. Wachovia, it turns out, habitually helped move money for Mexican drug smugglers. Wells Fargo (WFC), which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers -- including the cash used to buy four planes that shipped a total of 22 tons of cocaine, the Bloomberg story says.

"Wachovia's blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations," says Jeffrey Sloman, the federal prosecutor who handled the case.

Similarly, traffickers used accounts at Bank of America to purchase three planes that ended up smuggling 10 tons of cocaine. "Federal agents caught people who work for Mexican cartels depositing illicit funds in Bank of America accounts in Atlanta, Chicago and Brownsville, Texas, from 2002 to 2009," the article says.