U.S. Bank Admits Criminal Failure to Stop Money Laundering to Mexico

A subsidiary of one of the largest banking corporations in the United States has admitted it failed to properly investigate the source of tens of millions of dollars in suspicious money transfers to Mexico.

The casual admission and subsequent slap on the wrist highlights the important role U.S. financial institutions play in laundering money for Latin American criminal organizations and how they blatantly defy the law with impunity.

Banamex USA, a subsidiary of Citigroup, accepted responsibility for “criminal violations by willfully failing to maintain an effective anti-money laundering (AML) compliance program and for willfully failing to file Suspicious Activity Reports,” according to a recent press release from the U.S. Department of Justice.

Citigroup has agreed to pay $97 million to federal authorities to settle claims for not keeping an eye on its subsidiary and for allowing customers to launder money sent to Mexico.

In exchange for cooperating with the government’s investigation, paying the drop-in-the-bucket fine and admitting wrongdoing, the bank will not be formally prosecuted for breaking the law.

According to the Justice Department, Banamex USA processed more than 30 million remittances to Mexico valued at more than $8.8 billion.

Between 2007 and 2012, Banamex internally issued some 18,000 alerts about suspicious transactions, yet they investigated fewer than 10 of them and passed the info to U.S. authorities for only nine suspicious transactions during that five-year period.

As part of the agreement with the Justice Department, the bank “recognized that it should have improved its monitoring of… remittances but failed to do so.”

This situation is reminiscent of a famous incident in 2012, when the British multinational bank HSBC was fined $1.9 billion, in part for allowing Mexican and Colombian cartels to launder nearly $900 million worth of criminal proceeds using the bank’s U.S. subsidiaries.

The similarities between these two cases are worth noting, as financial entities both admitted that they had failed to establish proper mechanisms to prevent money laundering and they both evaded prosecution by cooperating with authorities and by paying a fine.

And the fines they paid were/are a mere pittance in comparison to how much profit the banks make in both their supposedly legal transactions and their deliberate illegal undertakings such as criminal money laundering.

This is how InSight Crime sees the slap on the wrist: “The fact that so many banking companies have been and continue to be implicated in allowing money laundering to take place through their institutions suggests that the deterrent effect of deferred prosecution and non-prosecution agreements is minimal. Thus, there is little incentive for financial institutions—whose main purpose is maximizing profit—to spend resources on oversight mechanisms, if they lose little when they are caught and stand to gain if they are not.”