The Associated Press has learned banking giant Wachovia Corp. has agreed to pay $160 million to settle a federal investigation into laundering of drug money through Mexican exchange houses.

Two federal law enforcement officials say the agreement being unveiled Wednesday in Miami calls for Wachovia to also institute better money-laundering controls. The officials spoke on condition of anonymity because the official announcement had not yet been made.

In return, the bank and its executives would avoid any criminal prosecution.

The Mexican exchanges are used by immigrants to send money home. Prosecutors say they are also used by drug traffickers to transfer illicit cash.

Wachovia is a unit of San Francisco-based Wells Fargo & Co.