Risk & Compliance

Citigroup Unit Settles Money Laundering Probe

Banamex USA will pay $97.4 million to resolve allegations that it failed to properly monitor millions of dollars in remittance payments to Mexico.
Matthew HellerMay 22, 2017
Citigroup Unit Settles Money Laundering Probe

Citigroup’s Banamex USA unit has agreed to pay $97.4 million to resolve a criminal investigation into allegations that it failed to properly monitor millions of dollars in remittance payments to Mexico.

The agreement also provides that the Justice Department will not prosecute the Banamex USA for violating the Bank Secrecy Act (BSA) by not maintaining an effective anti-money laundering program in connection with the Mexico remittances.

According to prosecutors, the bank processed more than 30 million remittance transactions to Mexico with a total value of more than $8.8 billion from at least 2007 until at least 2012. During that same period, its monitoring system issued more than 18,000 alerts involving more than $142 million in potentially suspicious transactions but conducted fewer than 10 investigations and filed only nine suspicious activity reports in connection with those alerts.

Among the red flags that Banamex USA allegedly ignored, The New York Times reported, 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,” the Times noted. “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.”

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. These two scenarios produced paper reports that were intended to be reviewed by hand by the two employees assigned to perform the BSA functions of the bank, in addition to time-consuming non-BSA responsibilities.”

As the bank began to expand its remittance processing business in 2006, it “understood the need to enhance its anti-money laundering efforts, yet failed to make necessary improvements to its transaction monitoring controls or to add staffing resources,” the DoJ said in a news release.

Citigroup previously reached a $140 million settlement with the Federal Deposit Insurance Corp and the California Department of Business Oversight over allegations of BSA violations by Banamex USA.