FDIC Fines Citi Subsidiary $140M for AML Failures

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WASHINGTON — The Federal Deposit Insurance Corp. issued a $140 million enforcement action against Banamex USA, a Citigroup subsidiary, on Wednesday for having Bank Secrecy Act and anti-money laundering deficiencies.

"In taking this action, the FDIC determined that the bank failed to implement an effective BSA/AML Compliance Program over an extended period of time," the FDIC said in a statement.

The action was concurrent with a $40 million penalty from the California Department of Business Oversight. The California DBO penalty will satisfy a portion of the FDIC enforcement action.

Banamex had been warned by regulators in 2012 to step up its BSA/AML program when it entered into a consent order with the California regulator and the FDIC, which required the bank to address more than 20 separate areas.

"Banamex agreed three years ago to correct numerous weaknesses in its anti-money laundering program. It has failed to do so," California DBO Commissioner Jan Lynn Owen said in a statement. "This new agreement holds Banamex appropriately accountable for its continued violations."

The FDIC said in addition to lacking the proper structural controls, the bank also failed to appropriately staff its compliance program.

"The institution failed to retain a qualified and knowledgeable BSA officer and sufficient staff, maintain adequate internal controls reasonably designed to detect and report illicit financial transactions and other suspicious activities, provide sufficient BSA training, and conduct effective independent testing," the FDIC said.

The Wall Street Journal reported in May that Citigroup is planning to wind-down Banamex amid regulators’ concerns over its weak BSA/AML controls.

Banamex USA is a California state-chartered commercial bank, with assets totaling more than $1 billion as of the end of the first quarter of 2015.

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