Citigroup has agreed to pay $97.4 million to end the inquiry of the U.S. Justice Department into the money-laundering that was occurring through the bank’s facilities at Banamex. The bank has already paid $140 million to FDIC as a fine for its oversight failures on Banamex. There will be no criminal charges, Banamex will be closed by June 30th, and Citigroup walks away with many lessons for prevention in the future
Lesson 1 Investigate your own flags.
From 2007-2012, Banamex USA generated 18,000 internal alerts on suspicious transactions. For some perspective, that was 18,000 alerts out of 30 million fund transfers to Mexico. However, Citigroup only conducted 10 investigations.
Lesson 2 Check your staffing levels.
Despite the volume of transactions, there were only two employees assigned to review the Banamex transactions.
Lesson 3 Listen to employees.
Employees were raising questions about suspicious transactions, but the Bank took no action and no additional staff members were added.
Lesson 4 Believe your own metrics.
Most of these transfers are transfer to family members and involve only one or two regular transfers. However, data analysis showed that one person in Mexico received 1,400 transfers from 950 senders who lived across 40 different states. The numbers and sources were screaming, “Intervention!”
Granted the $97 million in fines pales in comparison to the billions made on the transactions, but the operation is now shut down. Sometimes behaviors, while profitable, kill the golden goose.