Citi affiliate settles AML violations probe tied to Mexico-bound remittances

Register now

Banamex USA, an arm of Citigroup’s Mexican subsidiary, agreed Monday to pay $97.4 million to the Department of Justice over widespread anti-money-laundering abuses tied to Mexico-bound remittances. As a result of a prior settlement with the Federal Deposit Insurance Corp. over similar issues, Citi announced in 2015 that it would shut down the bank.

In the settlement, Banamex USA admitted to have filed only nine suspicious activity reports in connection with more than 18,000 suspicious transactions that set off its internal monitoring system. In exchange for the forfeiture and promises to cooperate in further AML investigations, the U.S. government agreed not to prosecute.

These alerts were tied to the more than 30 million remittances towards Mexico — worth $8.8 billion — the bank processed between 2007 and 2012. BUSA conducted less than 10 investigations in relation to the suspicious remittances, the settlement agreement said.

In addition, the bank’s transaction monitoring system was “limited and manual,” the Justice Department found, flagging down only two types of scenarios of suspicious activity. The process required subsequent AML reports to be reviewed directly by only two employees assigned to the task.

The settlement with Justice follows several enforcement actions the bank has faced from regulators in previous years over its AML failings. In 2015, BUSA was fined a combined $140 million by the Federal Deposit Insurance Corporation and California Department of Business Oversight. Then this March, the FDIC ordered several top executives to end all involvement in financial institutions.

In the agreement, Justice acknowledged the banks’ work to remediate its AML deficiencies since it first entered into a consent order with the FDIC in 2012. Afterward, BUSA filed more than 1,400 SARs tied to the remittances. and hired outside consultants as well as Citigroup employees to address the issues.

Justice also congratulated BUSA for shutting down its remittance services. BUSA “undertook a significant de-risking of its business and exited its money transmission business entirely by the end of 2013,” the settlement stated.

Citi said in a statement that this settlement “conclude[d] all remaining open inquiries conducted jointly by the Justice Department and the U.S. Attorney’s Office for the District of Massachusetts” pertaining to the AML violations.

“Among our most serious obligations as a bank is to achieve the strongest possible system for anti-money-laundering and sanctions compliance to protect the integrity of the financial system,” the bank added. “We continually take steps to strengthen and enhance our BSA and AML programs."

Citi added that as part of a wind-down plan approved by the FDIC, BUSA is expected to cease all banking operations at the end of next month. BUSA was acquired by Citi in 2001, along with its parent company Banco Nacional de Mexico.

For reprint and licensing requests for this article, click here.
AML Enforcement actions Citigroup DoJ