HomeNewsAnalysisUS Bank Admits Criminal Failure to Stop Money Laundering to Mexico

US 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 to engaging in criminal behavior by failing to properly investigate tens of millions of dollars in suspicious money transfers to Mexico, highlighting the important role US financial institutions play in laundering money for Latin American criminal organizations.

Banamex USA, a subsidiary of the US banking conglomerate Citigroup, accepted responsibility for “criminal violations by willfully failing to maintain an effective anti-money laundering (AML) compliance program … and willfully failing to file Suspicious Activity Reports,” according to a May 22 press release from the US Department of Justice.

In exchange for cooperating with the government’s investigation, paying a $97 million fine and admitting wrongdoing, the bank will not be formally prosecuted for breaking the law.

Between 2007 and 2012, Banamex internally issued some 18,000 alerts about suspicious transactions involving a total of more than $142 million in remittances to Mexico processed through the bank. Yet Banamex investigated fewer than ten of these, and warned US authorities of only nine suspicious transactions during the 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,” the press release states.

“As [Banamex] began to expand its remittance processing business in 2006, [Banamex] 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,” the Justice Department said. 

This is not the first time that Banamex has been hit with penalties for lax monitoring.

According to the Justice Department, the bank paid “a $140 million civil money penalty” in July 2015 to resolve separate, but related, investigations. Additionally, US authorities penalized several former senior executives of the company for related reasons in March 2017.

“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,” the press release says.

For its part, Citigroup released a statement saying that it was “pleased to resolve these matters which conclude all remaining open inquiries,” explaining that it is gradually closing down Banamex, with a liquidation date set for June 2017.

InSight Crime Analysis

Although the Justice Department did not specify whether or not any of the Banamex transactions at issue were used for money laundering by organized crime, remittance transfers are one of the many ways that Mexican crime groups send money earned from illicit activities in the United States back to Mexico. And Citigroup is hardly the first major international banking company to be accused of failing to stop suspicious transactions of this kind.

As previously pointed out by InSight Crime, the list of major banking entities that have faced similar reprimands from US authorities in the past is fairly extensive. In arguably the most famous incident, the British multinational bank HSBC was fined $1.9 billion in 2012, in part for allowing Mexican and Colombian cartels to launder nearly $900 million worth of criminal proceeds using the bank’s US subsidiaries.

SEE ALSO: Coverage of Money Laundering

The similarities between the HSBC case and the more recent one involving Citigroup are worth noting. The financial entities both admitted that they had failed to establish proper mechanisms to prevent money laundering to Mexico, but both evaded prosecution by cooperating with authorities and by paying a fine.

Although the financial penalities paid by banks in such instances may sound large, they are in fact little more than a slap on the wrist when considering the vast profits raked in by these institutions year after year.

Take, for instance, the case of the now-defunct Wachovia bank, which was purchased by Wells Fargo in 2008. As part of a “deferred prosecution” agreement with the US Justice Department — remarkably similar to the recent deal struck with Banamex — Wachovia agreed to forfeit $160 million for “willfully failing” to implement anti-money laundering measures over a five-year period. However, this fine amounted to less than 2 percent of the bank’s profits during any given one of those years, according to The Guardian.

As for the latest incident with Banamex, the value of Citigroup shares lost less than 1 percent on the market following the official announcement of the fine, according to the New York Times.

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 deterrant 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.

US authorities have argued that major financial institutions are simply too powerful for the government to successfully bring to justice, or that too aggressively prosecuting them for criminal wrongdoing could harm the US or global economy due to these companies’ huge size and importance. However, critics have countered that this “too big to jail” philosophy has impeded efforts to seek more impactful penalties for wrongdoing in banks’ agreements with authorities.

Some US banks have taken proactive steps to avoid being involved in criminal activity. But experts have argued that the lack of incentive on the part of financial institutions to police themselves means that governments must take a greater role in detecting and disrupting the illicit financial flows that fuel the activities of crime groups in Mexico and around the globe.

Compartir icon icon icon

What are your thoughts? Click here to send InSight Crime your comments.

We encourage readers to copy and distribute our work for non-commercial purposes, with attribution to InSight Crime in the byline and links to the original at both the top and bottom of the article. Check the Creative Commons website for more details of how to share our work, and please send us an email if you use an article.

Related Content


A former police colonel and hero of Peru's internal conflict has been arrested for his alleged connections to the "Pablo…


A new investigation alleges that one of the most influential evangelical pastors in Guatemala took money from a high-profile drug…


In January 2018, US authorities began following a Bulgarian biochemist named Antov Petrov Kulkin who they believed was running a…

About InSight Crime


We Have Updated Our Website

4 FEB 2021

Welcome to our new home page. We have revamped the site to create a better display and reader experience.


InSight Crime Events – Border Crime: The Northern Triangle and Tri-Border Area


Through several rounds of extensive field investigations, our researchers have analyzed and mapped out the main illicit economies and criminal groups present in 39 border departments spread across the six countries of study – the Northern Triangle trio of Guatemala, Honduras, and El…


InSight Crime’s ‘Memo Fantasma’ Investigation Wins Simón Bolívar National Journalism Prize

COLOMBIA / 20 NOV 2020

The staff at InSight Crime was awarded the prestigious Simón Bolívar national journalism prize in Colombia for its two-year investigation into the drug trafficker known as “Memo Fantasma,” which was…


InSight Crime – From Uncovering Organized Crime to Finding What Works

COLOMBIA / 12 NOV 2020

This project began 10 years ago as an effort to address a problem: the lack of daily coverage, investigative stories and analysis of organized crime in the Americas. …


InSight Crime – Ten Years of Investigating Organized Crime in the Americas


In early 2009, Steven Dudley was in Medellín, Colombia. His assignment: speak to a jailed paramilitary leader in the Itagui prison, just south of the city. Following his interview inside…