DEA: Drug Traffickers Found Citi ‘Favorable’ for Money Laundering

Federal investigators say drug traffickers laundered money through Citigroup, believing it had looser fraud measures.

As the Financial Times (FT) reported Monday (July 1), a newly unsealed indictment alleges that a pair of California residents — accused of working with the Sinaloa drug cartel — deposited tens of thousands of dollars in cash with Citi ATMs without being flagged for money laundering.

The two men allegedly pumped nearly $36,000 in drug proceeds into the ATM, splitting the money into smaller deposits to avoid the $10,000 transaction threshold at which banks must report to the U.S. Treasury.

Officials from the Drug Enforcement Administration (DEA) told the FT that the accused launderers — allegedly part of a larger network that cleaned at least $50 million from the sale of methamphetamine and fentanyl — looked at several banks for money laundering before deciding on Citi.

“There are banks that pay less attention than others,” said one senior official.

“There were two instances where in this investigation we had money couriers making 24 back-to-back deposits totaling $16,000 to a Citibank ATM,” another official told the FT. “There were 15 back-to-back deposits totaling $20,000 also to a Citibank ATM … They figure out the places that are more favorable to them.”

PYMNTS has contacted Citi for comment but has not yet gotten a reply. The banking giant declined to comment on the specific case for the FT report, but said its anti-money laundering (AML) policies were “robust.”

“When we find evidence of such [money laundering] activity, we notify the authorities as required and fully cooperate with any investigation through appropriate legal processes,” Citi said.

The news comes as regulators around the world are cracking down on lax money laundering controls in the banking sector.

For example, Switzerland’s financial market supervisory authority FINMA ruled last month that HSBC Private Bank (Suisse) SA violated money laundering regulations.

“HSBC Private Bank (Suisse) SA operated two high-risk business relationships where it failed to carry out an adequate check of either the origins, purpose or background of the assets involved,” FINMA said in a news release. “In addition, a number of high-risk transactions were insufficiently clarified and documented, making it impossible to establish the legitimate nature of these transactions.”

HSBC told PYMNTS it planned to appeal the decision, and said it takes its AML obligations seriously, “including complying with all laws and regulations in every market we operate in.”

Also in June, The Monetary Authority of Singapore (MAS), released its Money Laundering National Risk Assessment, which argued that banks posed the greatest money laundering risk to the country.

“The role of banks in facilitating transactions in the financial system, and their wide networks through which cross-border transactions can be conducted, make banks a common channel which criminals exploit,” the report said.

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