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Shearman & Sterling is leading an internal investigation for longtime client Citigroup Inc. in connection with an alleged $400 million fraud at the bank’s Mexican subsidiary, Banamex, The American Lawyer confirmed Thursday.

Citing unnamed sources, The New York Times was the first to report that federal authorities in Manhattan had recently opened a criminal probe after Citi disclosed in February that at least one employee at the Mexican unit Banamex (formally known as Banco Nacional de Mexico) had processed falsified documents related to a loan to a Mexican oil services company, Oceanografia. According to the Times, Citi lost millions of dollars in the alleged fraud. (In an early March filing with the U.S. Securities and Exchange Commission, Citi noted that Banamex USA had received a subpoena from the U.S. Federal Deposit Insurance Corporation.)

According to a lawyer briefed on the matter, Citi has retained Shearman to lead the internal investigation in the matter. It is not yet known whether the firm is also handling the bank’s response to the Banamex probe being led by the federal prosecutors in Manhattan or if Citi has hired a different firm. Shearman has a long history of representing Citi and its predecessors, and its previous senior partner, Rohan Weerasinghe, left the firm in 2012 to become Citigroup’s general counsel. A firm spokesman declined to comment when contacted by The Am Law Daily.

Notwithstanding its deep ties to Citi, Shearman’s engagement in connection with a potentially major criminal matter is a coup for the firm. Until recently, almost all the work the firm has handled for the bank has been related to corporate transactions.

The same lawyer confirmed that Citi has retained Paul, Weiss, Rifkind, Wharton & Garrison to lead an internal investigation related to a separate criminal probe by the U.S. attorney’s office in Boston. As first reported by Reuters, authorities have issued subpoenas to Citi in an effort to uncover whether the bank had the legally required safeguards in place to protect against against money laundering by bank customers. Some of those customers, according to the Reuters report, may have been laundering drug money. Paul Weiss chairman Brad Karp declined to comment when contacted about the firm’s role in the matter.

Karp and his Paul Weiss colleagues, including Theodore Wells Jr. and Susanna Buergel, have represented Citi in many of the bank’s biggest cases over the past few years. Karp and Wells, for instance, helped resolve a major securities fraud case filed by the Federal Housing Finance Agency last May for $250 million. And in February, Karp beat back a $4 billion arbitration claim brought against Citigroup on behalf of Abu Dhabi’s sovereign wealth fund stemming from a 2007 deal gone sour.