Overview
Banamex USA (“BUSA”) has agreed to forfeit $97.44 million and enter into a non-prosecution agreement with the US Department of Justice (“DOJ”) to resolve Bank Secrecy Act (“BSA”) violations. BUSA is owned by Citigroup Inc. and is a leading money transmitter specializing in sending remittances from the US to Mexico. The agreement, announced on May 22, also obligates BUSA and Citigroup to report any evidence or allegations of BSA or anti-money laundering (“AML”) violations to DOJ for a one year period. Additionally, Citigroup must report to DOJ on its efforts to enhance BSA compliance at its subsidiaries.
According to DOJ’s press release, between 2007 and 2012 BUSA’s monitoring system issued alerts on more than 18,000 transactions totaling over $142 million. Despite these alerts, BUSA initiated less than 10 investigations and filed just nine suspicious activity reports (“SARs”). No SARs were filed on remittance transactions from 2010 to 2012. Additionally, BUSA had only two employees with responsibility for BSA/AML compliance and those employees had other time-consuming responsibilities as well. The DOJ press release further notes that BUSA was aware of the need to improve its BSA/AML compliance program for years, but failed to implement needed enhancements such as adding additional staff. As part of the agreement, BUSA admitted to willfully failing to maintain an effective AML compliance program and willfully failing to file SARs. In resolving the matter, DOJ took into account Citigroup and BUSA’s robust remedial actions and cooperation with the investigation.
A related civil matter brought by the Federal Deposit Insurance Corporation (“FDIC”) and California Department of Business Oversight was resolved in July of 2015 with BUSA being ordered to pay a $140 million civil money penalty. In March of this year, FDIC announced enforcement actions against four former BUSA executives for BSA related violations. Citigroup is currently in the process of closing BUSA and expects operations of that unit to cease by June 30.
The BUSA agreement is one of the first agreements between DOJ and a financial institution under the Trump administration. The Obama administration was widely seen as taking an aggressive enforcement approach toward financial institutions, especially in the wake of the 2008 financial crisis. It remains unclear whether such an approach will continue under the Trump administration, but the BUSA agreement represents an early data point to consider. The BUSA penalty is considerably less than what some other banks have paid in recent years for BSA/AML violations. For example, in 2012 HSBC agreed to pay $1.9 billion in fines and forfeiture, though that case involved allegations of sanctions violations as well.
