Two Mexican banks go to trial today in Los Angeles on charges they laundered drug money.
Bancomer and Banca Serfin are accused of laundering currency provided by U.S. Customs Service agents during a two-and-a-half-year sting operation. The undercover agents pretended the funds were proceeds from Latin American drug cartels.
The banks had said the charges should be dismissed, asserting the U.S. had acted recklessly and violated a legal treaty with Mexico. A judge dismissed those arguments in February. If convicted, the banks could be required to repay the millions they are accused of laundering, plus a penalty equal to twice those amounts.
Richard A. Small, assistant director of bank supervision at the Federal Reserve Board, said his agency provided technical assistance to the Customs Service during the operation. Both of the banks being tried had American branches and were supervised by the Fed. Employees of several other Mexican financial institutions will be tried with the two banks.
Mr. Small, a former Justice Department prosecutor who once headed the agency's organized crime task force in Los Angeles, said the government must prove that the banks are liable for their employees' actions. "There's a lot of precedent" for that argument, he said.