The Federal Deposit Insurance Corporation today imposed a civil penalty of $140 million against Banamex USA for violations of the Bank Secrecy Act and anti-money laundering laws and regulations. The penalty was imposed the same day that Citigroup, which purchased Mexico-based Banamex in 2001, said it would be shutting down the Banamex USA unit this year.
In a concurrent action, the California Department of Business Oversight (CDBO) assessed a civil money penalty of $40 million. The FDIC’s penalty of $140 million will be satisfied in part by the CDBO’s penalty.
As Compliance Week previously reported, Citigroup said in an annual filing with the Securities and Exchange Commission in February that it was under investigation by the Financial Crimes Enforcement Network and the CDBO for BSA and AML violations at Banamex USA.
Last year, Citigroup previously revealed that it had received a grand jury subpoena issued by the U.S. Attorney’s Office for the District of Massachusetts concerning “policies, procedures and activities related to compliance with [BSA] and [AML] requirements under applicable federal laws and banking regulations.” Banamex USA also said it received a subpoena from the FDIC.
In imposing its penalty today, the FDIC determined that the bank failed to:
Implement an effective BSA/AML compliance program over an extended period of time;
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.
“Ensuring a strong and sustainable BSA/AML compliance program is an ongoing mission,” Citi said in a statement. Because Banamex USA has “not been able to operate to the scale necessary to generate consistent quality earnings,” Citi said it has “decided to wind down banking operations at BUSA, subject to a satisfactory liquidation plan.”
Citi added that the process will be “ongoing and orderly” as Banamex USA exits retail and commercial business lines.” BUSA intends to close the Houston and San Antonio branches in October, while the Los Angeles branch will remain open through the wind down process.