Citigroup — the third largest bank in the U.S. by assets, according to Reuters, is currently being probed by a federal grand jury. The probe is spurred by Citigroup’s and its affiliate Banamex USA’s compliance with the U.S. Bank Secrecy Act including money laundering.

Banamex is Citigroup’s Mexican unit and is responsible for operating the company’s largest consumer bank outside the U.S. It is now under scrutiny for money transfers that were made under the auspices of Citigroup across the Mexican border which are now the focus of a criminal investigation. 

Federal prosecutors in Massachusetts have subpoenaed Banamex USA, and the U.S. Securities and Exchange Commission(SEC) is investigating the alleged criminal activity of the company, although the focus of the subpoenas has not been disclosed. The New York Times reported that Citigroup’s chief executive Michael L. Corbat did not address the Banamex affiliate questions regarding the subpoenas while he was giving a briefing on the affiliate’s claim of fraud last week.

The fraud claims were the tip of the iceberg, it seems, for Citigroup and its Mexican division. Citigroup has disclosed that Banamex has been defrauded to the tune of $400 million. The SEC is already investigating the bank for accounting fraud after baseless loans were doled out. The loans amounted to $400 million, and reportedly reduced full year profit for the bank by $235 million. 

The Mexican Attorney General’s office has joined with the U.S. Federal Bureau of Investigation and the SEC to further evaluate the extent of the misconduct, according to reports. The probes are still in the investigatory stages, so no reference to criminal activity can be assured of as yet, but Citigroup is definitely under the scope of U.S. government agencies to determine the breadth and depth of its potential criminal activity and money laundering schemes.


Further reading:

Citigroup wins arbitration case

Federal judge OKs $730M settlement between Citigroup and investors 

SEC generates fewer enforcement actions, brings in record $3.4B in sanctions