WACHOVIA Corp's business practices drew scrutiny for the second time in as many days after a report that the bank has been ensnared in a federal probe of drug-money laundering tied to Mexican and Colombian transfer companies.

The Wall Street Journal reported that North Carolina-based Wachovia is one of several large US banks that have drawn the attention of federal authorities for their relationships with remittance companies.

The companies transmit an estimated US$50 billion a year to Latin America, mostly wages earned by immigrants to the US. The Journal cited unidentified people familiar with the probe.

Separately, the US Office of the Comptroller of the Currency said on Friday that Wachovia, the nation's fourth-largest bank by assets, will pay as much as US$144 million to settle claims that poor oversight allowed telemarketers and payment processors to withdraw millions of dollars from customers' accounts.

"It's pretty striking that Wachovia would face this kind of pretty bad publicity for two straight days," Carl Tobias, professor of law at the University of Richmond, said.

Wachovia is talking with the US Justice Department about a deferred-prosecution agreement that would require federal oversight of its compliance system, the Journal reported. Wachovia spokeswoman Christy Phillips Brown denied that such talks were taking place.

"Wachovia is not currently nor has it in the past engaged in those discussions," she told Bloomberg News. "Wachovia doesn't comment on the status or existence of investigations. The bank is committed to a strong anti-money- laundering program."

Justice Department spokesman Charles Miller declined to comment.

Federal prosecutors are investigating the alleged role of some remittance firms, known as casas de cambio, in money laundering by narcotics traffickers, according to the Journal.

Wachovia developed ties to remittance firms as a way of tapping the Hispanic market, the Journal said.