Gov. Probes Citigroup About Money Laundering

Citigroup’s Banamex USA subsidiary is the subject of two more investigations for possible money laundering, the bank reported in an annual regulatory filing the SEC on Wednesday (Feb. 25).

The U.S. Treasury’s Financial Crimes Enforcement Network (FINCEN) and the California Department of Business Oversight, California’s state banking regulator, requested information from the bank sometime in 2014, according to the Form 10-K filing. Both inquiries concern “policies, procedures and activities related to compliance with Bank Secrecy Act (BSA) and anti-money laundering (AML) requirements,” the filing said.

Last year, Citi reported that it received grand jury subpoenas from the Massachusetts U.S. Attorney’s Office and a subpoena from the FDIC related to its BSA and AML compliance programs. The bank reported those investigations again this year, and said it is cooperating with all the investigations.

Banamex USA is owned by Citi as part of Banco Nacional de México, Mexico’s second-largest bank, which Citi acquired in 2001 and has periodically been a problem for Citi ever since. Examiners at the Federal Reserve Bank of New York approved Banamex’s internal fraud controls in 2008, after which a multimillion-dollar fraud emerged there.

In 2013, Citi was ordered by the Fed to show it had tightened money-laundering safeguards, Bloomberg reported. The Mexican bank has also had significant losses on loans to Mexican home builders, and apparent fraud in loans to suppliers of Mexico’s state-owned oil company, Pemex.

In the face of the potential legal and regulatory actions, Citi also said in its 10-K filing that it has reduced its estimate of how much it may need to “reasonably possible” legal costs that it doesn’t already have reserves to cover. The new estimate is $4 billion, down from the $5 billion it estimated last year. However, the bank also said separately in January that it added $2.9 billion to its legal reserves in Q4.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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