Citigroup has decided to close down its Banamex USA operations after another large fine for regulatory violations related to the Bank Secrecy Act (BSA). Banamex USA has agreed to pay settlements totaling $140 million to the Federal Deposit Insurance Corporation and to the California Department of Business Oversight.
According to a statement provided by the FDIC, Banamex USA “failed to retain a qualified and knowledgeable BSA officer and sufficient staff, maintain adequate internal controls reasonably designed to detect and report illicit financial transactions and other suspicious activities, provide sufficient BSA training, and conduct effective independent testing.”
According to Citigroup, U.S. operations for Banamex (Banco Nacional de Mexico) have been closed at the Houston and San Antonio branches, and the final branch location in Los Angeles will close within a year.
Citigroup’s Banamex operations based in Mexico have been in the regulatory crosshairs for several years, and FinCen and the U.S. Justice Department are also investigating regarding regulatory violations there. According to Bloomberg, the Justice Department is investigating whether Citigroup facilitated the movement of account holders’ illicit cash through its Banamex operations.
In addition, Bloomberg reports that U.S. prosecutors are concerned that some of the subsidiary’s business lines were reporting to supervisors in Mexico while Compliance personnel were reporting to Citigroup in New York. Other related issues of due diligence and BSA/AML compliance are part of the investigation.
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