The combined penalties paid by Banamex USA following criminal and regulatory investigations for violations of the Bank Secrecy Act and anti-money laundering laws and regulations reached $237.4 million this month.

The final tally came as the Citigroup subsidiary agreed to forfeit $97.4 million and enter into a non-prosecution agreement (NPA) to resolve an investigation into BUSA’s Bank Secrecy Act (BSA) violations. In its agreement with the Department of Justice, BUSA admitted to criminal violations by willfully failing to maintain an effective anti-money laundering (AML) compliance program with appropriate policies, procedures, and controls to guard against money laundering and willfully failing to file Suspicious Activity Reports (SARs).

Admissions contained in the NPA stated that, from at least 2007 until at least 2012, BUSA processed more than 30 million remittance transactions to Mexico with a total value of more than $8.8 billion. During the same period, BUSA’s monitoring system issued more than 18,000 alerts involving more than $142 million in potentially suspicious remittance transactions. BUSA, however, conducted fewer than 10 investigations and filed only nine SARs in connection with these 18,000-plus alerts, filing no SARs on remittance transactions between 2010 and 2012.

BUSA also admitted that, for several years, it recognized that it should have improved its monitoring of MSB remittances, but failed to do so. BUSA employed a limited and manual transaction monitoring system, running only two scenarios to identify suspicious activity on the millions of remittance transactions it processed.

These two scenarios produced paper reports that were intended to be reviewed by hand by the two employees assigned to perform the BSA functions of the bank, in addition to time-consuming non-BSA responsibilities. As BUSA began to expand its remittance processing business in 2006, BUSA understood the need to enhance its anti-money laundering efforts, yet failed to make necessary improvements to its transaction monitoring controls or to add staffing resources.

Former actions

As Compliance Week previously reported, the Federal Deposit Insurance Corporation (FDIC) and California Department of Business Oversight in July 2015 ordered BUSA to pay a $140 million civil money penalty to resolve separate BSA regulatory investigations.

In March 2017, the FDIC also announced related enforcement actions against four former senior BUSA executives relating to BUSA’s violations of the BSA. As part of those actions, one executive was fined, and one was prohibited from working at financial institutions in the future.

The Justice Department in the NPA said it considered numerous factors in reaching a resolution. “In particular, BUSA engaged in extensive remedial actions, including devoting significant resources to remediation of the BSA and AML deficiencies, exiting BUSA’s MSB business entirely, and ultimately ceasing all banking operations at BUSA,” the Justice Department stated.

Additionally, BUSA received partial credit for its cooperation with the Justice Department’s criminal investigation, including:

Making factual presentations;

Voluntarily making foreign-based employees available for interviews in the United States;

Producing documents from foreign countries in ways that did not implicate foreign data privacy laws; and

Collecting, analyzing, and organizing voluminous evidence and information for the Justice Department, including identifying and providing documents relating to certain individuals and topics.

In addition, pursuant to the NPA, BUSA and Citigroup agreed to cooperate fully in this and any other Justice Department investigation relating to violations of the BSA and federal money laundering statutes and, for a period of one year, to report to the Justice Department any evidence or allegation of violations of the BSA or money laundering laws. Citigroup further agreed to report to the Justice Department regarding implementation of compliance measures to improve oversight of its subsidiaries’ BSA compliance.

Citi response

In a statement, Citi said it is “pleased to resolve these matters,” which it said concludes all remaining open inquiries conducted jointly by the Department of Justice and the U.S. Attorney’s Office for the District of Massachusetts concerning the BSA and AML compliance conduct of Citigroup and related entities, including BUSA.

Following Citi’s BUSA settlement with the FDIC and California’s Department of Business Oversight, Citi announced its intention to wind down banking operations at BUSA, subject to a satisfactory liquidation plan. “That liquidation plan was submitted to the FDIC and received a non-objection,” Citi announced. “As a result, BUSA anticipates ceasing banking operations as of June 30, 2017.”

Concluded Citi: “Among our most serious obligations as a bank is to achieve the strongest possible system for anti-money-laundering and sanctions compliance to protect the integrity of the financial system, and we continually take steps to strengthen and enhance our BSA and AML programs.”

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