May 23, 2017

Banamex USA Agrees to Forfeit $97 Million in Connection with Bank Secrecy Act Violations

By the C|C Whistleblower Lawyer Team

As reported in today’s New York Times, Los Angeles Times, and other news outlets

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. 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.

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. In its agreement with the Justice Department, BUSA admitted to criminal violations by willfully failing to maintain an effective anti-money laundering (AML) compliance program with appropriate policies, procedures, and controls to guard against money laundering and willfully failing to file Suspicious Activity Reports (SARs).

According to admissions contained in the NPA and the accompanying statement of facts, from at least 2007 until at least 2012, BUSA processed more than 30 million remittance transactions to Mexico with a total value of more than $8.8 billion. During the same period, BUSA’s monitoring system issued more than 18,000 alerts involving more than $142 million in potentially suspicious remittance transactions. BUSA, however, conducted fewer than 10 investigations and filed only nine SARs in connection with these 18,000-plus alerts, filing no SARs on remittance transactions between 2010 and 2012.

In July 2015, in a related matter, the Federal Deposit Insurance Corporation (FDIC) and California Department of Business Oversight ordered BUSA to pay a $140 million civil money penalty to resolve separate BSA regulatory investigations. Thus, the combined penalties paid by BUSA associated with the criminal and regulatory investigations of its BSA compliance violations amount to approximately $237.44 million. In March 2017, the FDIC also announced related enforcement actions against four former senior BUSA executives relating to BUSA’s violations of the BSA. As part of those actions, two executives were fined and prohibited from working at financial institutions in the future, one was fined, and one was prohibited from working at financial institutions in the future.

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