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Regulators Take ‘Magnifying Glass’ to Nested Accounts in Wake of Wachovia Fine
By Brian Monroe
printFederal regulators have increased their scrutiny of correspondent relationships that could be used to mask nested accounts for non-U.S. money remitters otherwise barred from American banks because of compliance risks. The focus on "nested" foreign money services businesses (MSBs) has increased over the past year following large monetary penalties levied by the government against banks, including fines against Wachovia for $160 million in March 2010, and Israel Discount Bank for $20 million and Bank of America for $7.5 million in 2006 for failing to adequately monitor their foreign MSB accounts. Because the MSBs, which can include currency exchange houses known...
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The U.S. Treasury Department is reportedly investigating the role of Wachovia Bank compliance staff in the financial institution's failure to sufficiently scrutinize more than $420 billion in transactions tied to Mexican currency exchange businesses.
Wells Fargo & Co., the parent company of Wachovia Bank, will pay $160 million to settle anti-money laundering compliance problems tied to accounts with Mexican currency exchange companies, the company said Wednesday.
An expected settlement between the U.S. Justice Department and Wachovia Bank over lax anti-money laundering policies is highlighting the compliance risks of doing business with Mexican currency exchange companies.
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