Magazine article American Banker

Laundering Probe Shifts to Correspondent Banking

Magazine article American Banker

Laundering Probe Shifts to Correspondent Banking

Article excerpt

The focus of money laundering investigations is shifting from private banking operations to correspondent banking relationships.

On the heels of congressional hearings into the anti-money-laundering safeguards in Citigroup's private banking unit, new reports surfaced Friday that in 1997 a New York branch of Citibank was used in channeling $10.8 million of tainted money to the late drug lord Amado Carrillo Fuentes, who was trying to set up operations in Argentina at the time.

A staff member of the Senate Governmental Affairs Committee's subcommittee on investigations said the next phase of the panel's work would be to look into correspondent banking and that its investigators were familiar with the money transfers in question. Anti-money laundering legislation has been introduced in both chambers of Congress.

Mexico's representative to Interpol, the international police organization, told reporters in Mexico City that a money-laundering investigation by Mexican police, U.S. Customs officials, and Argentine police had led to the seizure of records from Mercado Abierto Bank, an investment house in Buenos Aires.

The Argentine firm kept an account in Citibank New York that was used to funnel the $10.8 million to Mr. Fuentes and his lieutenants, according to the Interpol representative, Juan Miguel Ponce Edmondson.

An unidentified Citibank official told La Nacion, a Buenos Aires newspaper, that the bank had acted as a branch bank for money transferred between Bank of America and Mercado Abierto, though Citibank was not familiar with the origins or destinations of the funds. …

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