The U.S. Justice Department's criminal investigation into money laundering at Citigroup Inc.’s Banamex USA unit has unearthed violations serious enough to warrant a large fine under the Bank Secrecy Act, according to reports.
The criminal revelations are the latest to plague America's banking system, which has been handed tens of billions of dollars in fines over the last 3 years yet somehow escaped criminal prosecution.
Prosecutors uncovered e-mails from low-level employees at the unit who had concerns about lax anti-money-laundering practices, specifically that they didn't know enough information about the recipients of large cash transfers, and that requests for more resources for compliance staff were ignored.
There are likely to be more violations, as the investigation, conducted by the U.S. Attorney’s Office in Massachusetts, won't be finished until next year.
The corruption runs deep in the U.S. banking industry, as just last year JPMorgan Chase & Co. paid $2.6 billion to the Justice Department and other regulators for failing to halt Bernard Madoff’s Ponzi scheme, the biggest fine yet from a probe into secrecy-act violations.
Citigroup and the Justice Department both declined to comment on the reports.
Yet Citigroup clearly knows a large fine is coming, as it set aside $2.9 billion in the fourth quarter to cover fines from investigations into money laundering as well as allegations, in addition to rigging currency and interest-rate benchmarks and other "small matters", according to company presentations.
So while the bank, like many others such as JPMorgan, Deutsche Bank and Goldman Sachs, continues to run a brazenly criminal operation, nobody within law enforcement seems to be able or willing to prosecute.
While the large fines make headlines they amount to far less than the spoils the banks reaped from their various criminal enterprises.
The Bank Secrecy Act of 1970 was passed to stop organized crime from laundering funds through foreign accounts. It mandates that U.S. banks keep records of transactions of more than $10,000 and obliges them to report suspicious activities that could be linked to money laundering, tax evasion or other criminal activity.