Senior officials from U.S. law enforcement have suggested that Citigroup was preferred by drug traffickers as a means to launder money due to perceived lax fraud controls within the firm. This revelation follows a recent indictment which highlighted two individuals from California, believed to be allied with the infamous Sinaloa cartel, depositing large amounts of cash into Citi ATMs.
The prosecution has explained these two individuals, in January 2021, put approximately $36,000 (around £26,000) in unlawful cash into these machines and did so by breaking the amount into numerous smaller deposits, each spaced a minute or two apart. This allowed them to avoid triggering the $10,000 (roughly £7,000) reporting threshold, a mandatory requirement for US banks to inform the Treasury Department of such large transactions.
Drug Enforcement Administration (DEA) officials disclosed that these two men, believed to be part of an extensive criminal ring laundering at least $50 million (around £36 million) sourced from the fentanyl and meth drug trade in the United States, had surveyed several other banks before settling on Citibank.
Senior DEA officials expressed their belief that some banks are less vigilant than others with regard to monitoring large deposits. In this investigation, they discovered instances of money couriers making multiple consecutive deposits at Citibank ATMs, totalling over $16,000 (£11,000) and $20,000 (£14,000) respectively, which they believe should have raised alarm.
Guillermo Zambrano and Luis Belandria-Contreras, the two implicated men, apparently aimed to keep the deposits small enough to go unnoticed. Yet, DEA officials believe such abnormal patterns of deposits should have triggered alerts within the system.
When contacted, the lawyer for Mr Belandria-Contreras provided no comment. However, the legal representative for Mr. Zambrano, John Targowski, has asserted that his client only participated in the alleged acts due to financial duress and threats from a cartel member, and therefore plans to adopt a duress defence. Both men have pleaded their innocence.
Title: Jack Chambers: Anticipating the Youngest Finance Minister in Ireland since the days of Michael Collins
Citi made no comment on the specific case, adhering to the necessity of maintaining confidentiality regarding transaction reports. The bank reassured the public that its anti-money laundering protocols are sturdy in structure; they stated: “Upon discovery of any such activities, we promptly alert the necessary authorities and wholly support any subsequent investigation through the legal channels.”
The indictment also shed light on an instance where another defendant, Jiayong Yu, supposedly deposited a cashier’s cheque at a JPMorgan Chase ATM and “around $100,000 in United States money at a Chase Bank teller window” the previous year. There was no implication that Chase had neglected to address the transaction. Chase chose not to comment. Yu has maintained his not guilty plea to related accusations. His legal representation did not provide a response when asked for a comment.
Authorities have been frequently expressing their caution over the increasing proficiency of Mexican drug traffickers and Chinese associates in utilising the legitimate banking system for money laundering activities.
“We are witnessing a significant surge in money, cash being stored in banks and then transferred elsewhere,” stated a senior DEA official. The official also noted that high amounts, in the tens of thousands, are regularly sent back to China each month, through money transfer facilities located in Flushing, New York.
In 2012, HSBC had to pay a hefty fine of $1.9 billion to the Department of Justice for their failure to stop cartels in Mexico from laundering money, as an enquiry uncovered that large sums of money were being deposited daily via teller windows at HSBC branches in Mexico.
The prosecutors claimed that the drug traffickers even “created boxes specially designed to fit exactly within the dimensions of the teller windows”.
Furthermore, money-laundering plans have since evolved to become more complex, thanks to a cooperative relationship with Chinese citizens living in the US who are engaged in using coded apps, cryptocurrency and reflect transactions in China’s underground banks to conceal their activities.
“Drug cartels in the United States are desperate to send the cash accumulated from drug sales back to Mexico,” stated Martin Estrada, the US attorney for the Central District of California, only last month.
“He noted that “Chinese money-laundering networks are actively assisting affluent Chinese citizens with the acquisition of cash in this country, therefore dodging China’s export controls on the flow of cash.” The escalation in fentanyl trafficking has resulted in creating “almost unlimited sources of cash,” according to Estrada.
Keeping a record of these deals has challenged authorities. According to the high-level DEA officer, the rapid evolution and spread of this activity has exceeded the capacity of the law enforcement to supervise and trace. – The Financial Times Limited 2024 achieves copyright protection.