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Getting dirty money clean

He and Woods agree the penalties in the system don’t work as a deterrent.

“This deferred prosecution allows bankers a free play at the roulette table with somebody else’s money, and if they make a profit, they share in profits,” said Woods. “If they lose, they rub their hands and walk away and are not held accountable or responsible for their actions.”

“If a series of bank officers were carted away, if the public were to hear the facts that cause them to become guilty and if they were to receive lengthy prison sentences, putting those two on a scale I think the $160 million fine is much lighter,” said Mazur.

So where are the government watchdogs?

Compliance departments in national and foreign banks in the U.S. are supposed to be regulated by the Office of the Comptroller of the Currency (OCC), a division of the Treasury Department. But Woods says the OCC is failing at its job.

“The OCC gave Wachovia Bank a satisfactory rating for its compliance program for anti-money laundering in correspondent banking, including the Mexican casas de cambio, for five, six, seven, eight, however many consecutive years they gave that a satisfactory rating,” Woods said, “and all the while, as it subsequently transpires, the bank was processing billions of dollars with inadequate controls.”

The OCC, Woods says, can’t spot the problem even when it is on the scene.

“The OCC actually have their own physical office in Wachovia Bank’s headquarters,” he said. “It’s not as though they were removed from it; they were actually part of the fabric of Wachovia Bank’s corporate headquarters. Why do I find the things they do not find?”

Woods is not alone in his criticism. In 2004 a Senate report found the OCC had done a “poor job” of compelling Riggs Bank to comply with money laundering laws.

In 2006 the Treasury Department’s inspector general found that the OCC had “sent the wrong message to the banking industry” by failing to take formal enforcement action against Wells Fargo.

Writing in 2007, Manhattan District Attorney Robert Morgenthau said “the Comptroller has shown itself to be a timid regulator even in the face of flagrant wrong doing.”

Need to Know tried repeatedly to get someone from the OCC, a public agency, to speak with us on camera, and they repeatedly declined.

In a four-page statement, the OCC defended its record saying it “diligently supervises more than 1,500 banks … and [takes] appropriate supervisory and enforcement actions.” But it acknowledged that “in hindsight our experiences with Wachovia highlight opportunities to improve our supervision.” It has drafted new procedures.

“It’s a perverse thing, five years the … OCC don’t do their job and net $50 million,” said Woods. “I come along, I do my job and their job and I got canned.”

In March, the OCC, which took in a $50 million fine from Wachovia, thanked Woods for providing information that was “indicative of broader problems” at the bank.

Where there’s a will there’s a way

Four years after filing his first suspicious activity reports, Woods’ suspicions were vindicated when Wachovia settled with U.S. prosecutors. But by then he had left his job. He says the stress and isolation of being a whistleblower finally wore him down.

“It’s David against Goliath. And Goliath has $800-dollar-an-hour lawyers coming out their ears,” Woods said. “The stakes are very, very high. And if you lose, you have lost your job; you’ve lost your livelihood. And you look at your wife and your three kids and you feel that I’ve let you down so, so bad. If I’d a kept my mouth shut, everything would be going along fine.”

Woods, now a consultant, is still fighting for reform. In Miami, at a financial conference earlier this month, Woods shared his ideas for fixing the system.

“Compliance officers should not be part of a bank’s bonus regime,” he said at the conference.

Woods suggests a wall between those whose job it is to investigate suspicious activity in the banks and those whose job it is to bring in the money.

“We have to seriously look at taking the support functions out of the bonus culture. Pay them more money but stop them being compromised,” Woods said.

He encouraged the compliance officers in the audience to stand up for what’s right.

“There is a way to do something about stopping some of this money laundering that will undoubtedly have an impact upon the whole crime business,” he said. “It will stop some of the murders, because it will stop the purchase of some of the weapons. There is a way; the question for all of us is, is there a will?”

Co-produced by Bob Reiss

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  • Chris Kerr

    Robert Mazur’s “The Infiltrator” is a must-read. It is a compelling, well-written first-hand account of his amazing undercover work in one of the biggest money laundering investigations in history.

  • JanisL

    Florida is drowning in rampant banking corruption. The high number of foreclosures is clear evidence of mortgage fraud gone wild during the Bush years, 2000-2008 and beyond. The “asleep at the wheel” culture in Tallahassee, dictated by Bush’s brother Jeb. The edict went out here in 1998: no regulation of business, banking, the Chamber of Commerce’s dream! No consumer protection–you make a complaint to Tally, they ignore it! This culture still exists as Charlie Crist just left the worst of it in place! If you are cheated by a developer, a business, a scammer–you are on your own, there is no recourse in Florida. Mr. Mazur, take a look at the money laundering here, the FDOT laundering illegal foreign campaign contributions for the GOP/Bush, the murder of Raymond Lemme, a Florida investigator who tripped over this high crime prior to the prez election, and paid for it with his life! There is nothing the ruthless GOP powers that be will stop at to get their man in office! The pay to play has rendered state representation of ordinary Floridians nonexistent. It’s all about the high-roller special interests–developers, builders, corrupt, corrupt, corrupt!

  • D. Tigert

    Thanks to all involved in getting this out for the public to see and be enlightened. This other facet of Banking, money laundering, certainly adds much evidence to the corruption that is allowed by the very ones that are entrusted and paid to stop the very thing that they encourage.
    Can faces and names be attached to the OCC? How do they get their jobs and who has been responsible for putting them there? Can Congress see these banks in the same light that I see them; as more conscienceless, greedy, money snatching CEO machines? Evidently not. I guess that looking from the top has acompletely different perspective. Who could we goad into taking some action?

  • Steve Cook

    After reading Bob Mazur’s chilling report of banker’s laundering drug monies for large cartels and others, it becomes quiet clear what a dangerous position Mazur was in during his undercover work for the U.S. government. It also demonstrates how only a very few agents have the abilities to with stand the extreme pressures of working under for long months, knowing every move is being watched, and the criminals have the ability to kill and will, at any time in order to protect their millions and positions. I’m sure Mazur worked on other undercover cases that led up to his BCCI case that stunned the world, and still underscores just how far some dirth bankers will go to make a dollar.

  • Bill Andrews

    What is the Drug dealers going to do when the Government starts micro- chipping money to track over the borders to drug dealers…( Encapsulating Times ? ) The long trail back home ?…

  • Frank Gonzalez

    Our country owes a great debt to Mr. Mazur for risking his life and that of his family. It takes super guts to do what he did. Bank officials need to first visit the medical examiners office and view the bodies of those they helped kill by drug cartels as well as those who died from the drugs that they helped bring into this country, and then be placed in jail for a very long time. That will be the shot heard by the other banks.

  • Daniel Balestriere

    The Infiltrator gives an outstanding insight into the world of illegal drug money laundering. Bob Mazur and his fellow undercover agents risked their lives and infiltrated the organization of one of the most cold blooded criminals of all time, Pablo Escobar. Mazur and his cohorts should have been awarded the US Treasury Department Medal of Valor for their outstanding work. The book is an outstanding read.

  • John

    I am neither surprised nor shocked by this story. The simple fact of the matter is that our systems are corrupts and have been corrupt for decades. Corruption is the rule as long as you can get away with it. Playing by the rules is for small fries. Welcome to the world of Corporate business…anything goes as long as the profits outweigh the risk…just ask BP about that one.

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