May 22, 2017
Contact: SA Timothy Desmond
Phone Number: (617) 557-2100
Banamex USA Agrees To Forfeit $97 Million In Connection With Bank Secrecy Act Violations
MAY 22 - Boston - Banamex (BUSA), a financial institution based in Los Angeles, California, and a subsidiary of Citigroup Inc., agreed to forfeit $97.44 million and entered into a non-prosecution (NPA) to resolve an investigation into BUSA’s Bank Secrecy (BSA) violations. Michael J. Ferguson Special Agent in Charge of the Drug Enforcement Administration and Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division announced the agreement. As part of its agreement with the Justice Department, BUSA admitted to criminal violations by willfully failing to maintain an effective anti-money (AML) compliance program with appropriate policies, procedures, and controls to guard against money laundering and willfully failing to file Suspicious Activity (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.
BUSA also admitted that, for several years, BUSA recognized that it should have improved its monitoring of MSB remittances but failed to do so. BUSA employed a limited and manual transaction monitoring system, running only two scenarios to identify suspicious activity on the millions of remittance transactions it processed. These two scenarios produced paper reports that were intended to be reviewed by hand by the two employees assigned to perform the BSA functions of the bank, in addition to time-consuming non-BSA responsibilities. As BUSA began to expand its remittance processing business in 2006, BUSA understood the need to enhance its anti-money laundering efforts, yet failed to make necessary improvements to its transaction monitoring controls or to add staffing resources.
In July 2015, in a related matter, the Federal Deposit Insurance (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.
As explained in the Non-Prosecution Agreement, the Justice Department reached this resolution based on a number of factors. In particular, BUSA engaged in extensive remedial actions, including devoting significant resources to remediation of the BSA and AML deficiencies, exiting BUSA’s MSB business entirely, and ultimately ceasing all banking operations at BUSA. BUSA received partial credit for its cooperation with the Justice Department’s criminal investigation, including making factual presentations, voluntarily making foreign-based employees available for interviews in the United States, producing documents from foreign countries in ways that did not implicate foreign data privacy laws, and collecting, analyzing and organizing voluminous evidence and information for the Justice Department, including identifying and providing documents relating to certain individuals and topics. In addition, pursuant to the NPA, BUSA and Citigroup agreed to cooperate fully in this and any other Justice Department investigation relating to violations of the BSA and federal money laundering statutes and, for a period of one year, to report to the Justice Department any evidence or allegation of violations of the BSA or money laundering laws. Citigroup further agreed to report to the Justice Department regarding implementation of compliance measures to improve oversight of its subsidiaries’ BSA compliance.
This case was investigated by the Drug Enforcement Administration’s New England Field Division, the Internal Revenue Service’s Criminal Investigation Boston Field Office and the FDIC’s Office of Inspector General. Senior Trial Attorney Jennifer E. Ambuehl and Trial Attorney J. Randall Warden of the Criminal Division’s Money Laundering and Asset Recovery Section, Bank Integrity Unit, prosecuted the case. Assistant U.S. Attorneys David J. D’Addio and James E. Arnold of the U.S. Attorney’s Office for the District of Massachusetts provided significant assistance in this investigation.