The U.S. Justice Department is investigating whether Citigroup Inc. let customers move illicit cash through its Mexico unit, setting the bank’s biggest international operation in the path of an expanding money-laundering probe.
The Justice Department subpoenaed Banco Nacional de Mexico, known as Banamex, demanding information about its anti-money laundering controls and seeking documents about its due diligence on operations involving hundreds of clients, according to documents reviewed by Bloomberg.
The subpoena, which was sent in January but hasn’t been reported or disclosed by the bank, expands a Justice Department investigation previously known to focus only on a small U.S. unit. It shows investigators are looking into a Mexico operation that accounts for about 10 percent of the New York-based company’s core revenue, and has about 1,500 branches -- almost twice as many as Citigroup has in the U.S.
Banamex, which is wholly owned by Citigroup, is already under U.S. investigation over alleged loan fraud against the bank. Citigroup separately said it shut down a unit of Banamex security guards last year after uncovering fraud there.
The investigation further threatens the legacy of Manuel Medina-Mora, who has been a face of Banamex for nearly two decades. He led Banamex when Citigroup acquired it in 2001, later advancing to run Citigroup’s Latin American consumer operations and ultimately its global consumer bank. Medina-Mora, who stepped down as Citigroup’s co-president last month, retains the title of non-executive chairman of Banamex.
California Probe
Neither Citigroup nor Medina-Mora have been accused of wrongdoing. Molly Millerwise Meiners, a Citigroup spokeswoman, declined to make Medina-Mora available for comment. Peter Carr, a Justice Department spokesman, declined to comment.
Citigroup disclosed last year that the U.S. Attorney’s Office in Boston was looking into money-laundering controls at a California unit, Banamex USA. Meiners declined to comment on any probe, referring to Citigroup’s most recent disclosure of the Banamex USA probe, from March, which said the bank is cooperating. Neither disclosure of the Banamex USA probe mentioned the Mexico unit.
The Justice Department’s foray into Mexico comes after multiple U.S. regulators have poked at similar issues in the U.S. Banamex USA, a collection of U.S. branches that Citigroup acquired when it bought the Mexican banking giant, now consists of three branches in California and Texas. On Wednesday, Citigroup said it would close those branches after it agreed to a $140 million settlement with the Federal Deposit Insurance Corp. and California regulators over deficiencies in Banamex USA’s anti-money laundering program.
Special Delivery