Citigroup settles claims over possible money laundering

Citigroup's Mexico unit, which turned a blind eye to as much as $8.8 billion in US-Mexico money transfers over five years, according to federal investigators, on Monday settled a criminal probe into the matter by paying a $97 million fine. In exchange, the Justice Department agreed not to file criminal charges against Citi for inadequate oversight of Banamex.

The penalty is on top of US$140 million in civil fines Banamex paid to USA and California agencies over a separate bank secrecy act probe. The bank said it had it already reserved for the expense.

The operation had $1 billion in assets, $700 million in deposits and 394 employees in March 2015, a few months before Citibank agreed to shut it down, according to regulatory filings. During the same period, BUSA's monitoring system issued more than 18,000 alerts involving more than $142 million in potentially suspicious remittance transactions.

The government said Banamex USA used only "a limited and manual transaction monitoring system, running only two scenarios to identify suspicious activity on the millions of remittance transactions it processed".

Banamex USA is an affiliate of Banamex, which Citigroup bought in 2001.

As part of the agreement, Citigroup admitted that Banamex USA violated the Bank Secrecy Act from at least 2007 until at least 2012.

The bank reached a settlement with the Justice Department and United States attorney's office in Boston for US$97.44 million, with no sanctions against Citigroup and a so-called non-prosecution agreement, according to the bank and Justice Department.

Citi, which previously announced it was winding down Banamex's US operations, entered what's known as a "non-prosecution agreement" with authorities.

  • Zachary Reyes