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Citigroup agrees to $97.4m settlement in money laundering inquiry

NEW YORK — For years, Citigroup employees feared that millions of dollars the bank was moving to Mexico might be suspicious. Yet in many cases, the bank did not alert regulators or step up its monitoring for money laundering, federal prosecutors said Monday.

Even as the Citigroup unit Banamex USA was growing to dominate remittances from the United States to Mexico, the bank did not properly safeguard its systems from being infiltrated by drug money and other illicit funds, prosecutors said.

On Monday, Citigroup agreed to pay $97.4 million in a settlement after a long federal investigation into Banamex USA. In exchange, the Justice Department will not file criminal charges against the bank in connection with inadequate oversight of Banamex USA, which is based in California.


As part of the agreement, Banamex USA “admitted to criminal violations by willfully failing to maintain an effective anti-money-laundering” compliance program, the Justice Department said.

The deal represents the first such agreement between a major bank and the Justice Department under Attorney General Jeff Sessions.

It also resolves some of Citigroup’s most serious regulatory issues related to its profitable, but risky, business in Mexico.

From 2007 to 2012, Banamex USA generated about 18,000 internal alerts of suspicious transactions among the 30 million Mexico remittances it processed, prosecutors said.

Yet the bank conducted fewer than 10 investigations and filed only six suspicious activity reports with regulators.

Among the red flags that Banamex USA did not heed was $1.3 billion in remittances that each totaled more than $1,500 — five times the amount that families typically send.

Most families receive remittances from one or two predictable sources. But one account holder in Mexico received 1,400 remittances from 950 senders in 40 states. Despite several automatic alerts about these transactions, Banamex USA did not file a suspicious activity report with regulators.


One of the biggest problems was staffing. The bank had only two people assigned to review the thousands of suspicious transactions manually.

Citigroup inherited Banamex USA in 2001, when the bank acquired Banamex, one of Mexico’s largest banks.

Banamex helped fuel Citigroup’s profit as the bank rode the wave of Mexico’s growing economy and financial modernization. Banamex USA was supposed to build on Citigroup’s access to Mexico’s market by connecting the millions of Mexican immigrants in the United States who needed to send money to their families at home.

But Banamex has also been a source of scandals, which eventually toppled one of its executives, the co-president, Manuel Medina-Mora, who oversaw its Mexico operations and retired in 2015.

Citigroup has been closing Banamex USA. On Monday, Citigroup said it expected the troubled unit would cease operations by June 30.