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March 5, 2014

Citigroup Affiliate’s Troubles Multiply as Money-Laundering Subpoenas Follow Fraud

A headache is growing for Citigroup as a banking affiliate involved in money transfers across the Mexican border has become ensnared in a criminal investigation.”

“The disclosure of the inquiry on Monday follows the bank’s admission on Friday that it had been defrauded of $400 million in a scheme involving a financially shaky oil services company in Mexico.”

“A Citigroup affiliate based in Los Angeles received a grand jury subpoena from federal prosecutors in Massachusetts related to anti-money-laundering compliance, the bank said in a securities filing on Monday. The focus of the subpoenas is unclear. The affiliate has also received a subpoena from the Federal Deposit Insurance Corporation related to its anti-money-laundering program and the Bank Secrecy Act.”

“The affiliate, Banamex USA, provides banking services to individuals and small businesses in the United States and Mexico. Until recently, it was a large player in transferring money across the border between family members, industry experts say.”

“In public statements on Friday detailing the purported fraud at Banamex in Mexico, Citigroup’s chief executive, Michael L. Corbat, did not mention the inquiries involving the Banamex affiliate in the United States.”

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Read full New York Times DealBook article here.

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