The Wachovia Bank unit of Wells Fargo & Co is in talks with the U.S. Justice Department to settle complaints relating to the alleged failure in bank controls that enabled Mexican exchange houses to launder drug money, the Wall Street Journal said, citing people familiar with the situation.

A settlement could come within weeks, the people told the paper. It is not clear whether cash payment will be part of the settlement, the newspaper said.

In a statement, Wachovia said it is cooperating with the probe, which concerns matters predating the bank's takeover by Wells Fargo. It said it is committed to maintaining compliant and effective anti-money laundering policies and practices, and a strong compliance and risk management culture.

The U.S. attorney's office in Miami began the probe about three years ago, and has focused on the alleged role a Wachovia unit played in processing illegal money transfers for the exchange houses, the newspaper said, citing court documents and people familiar with the matter.

The exchange houses dot the U.S.-Mexican border and serve as a hub in the global remittance business that allow U.S. immigrants to send money back to Latin America to help relatives, according to the newspaper.

However, Federal officials also have identified the money transfer business as a way for drug traffickers to move cash around, the newspaper said.

In an annual filing with the U.S. Securities and Exchange Commission on February 26, Wells Fargo said it is engaged in discussions to resolve this matter by paying penalties and entering into agreements concerning future conduct.

(Reporting by Sakthi Prasad in Bangalore; Editing by Derek Caney and Richard Chang)

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