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Citi was the favorite bank to launder money: US officials say

This preference is attributed to the perception that Citigroup has less robust fraud controls compared to other banks

Senior US law enforcement officials have suggested that drug traffickers prefer to use Citigroup for laundering money due to perceived weaker fraud controls. This assertion, reported by the Financial Times, underscores the ongoing challenges banks face in detecting illicit activities.

Sinaloa Cartel. Evading Detection with Smaller Deposits

Last week, US prosecutors shed light on the methods used by two Californians allegedly affiliated with the Sinaloa cartel. They are accused of depositing nearly $36,000 into various Citi ATMs across multiple incidents in January 2021. By dividing the total amount into smaller deposits, each under $10,000, they managed to avoid triggering mandatory reporting to the US Treasury.

By splitting the total amount into numerous smaller deposits, prosecutors claim that the individuals managed to stay below the $10,000 threshold, which triggers mandatory cash transaction reporting to the US Treasury. This method allowed them to avoid detection.

DEA Insights on Banking Choices

Drug Enforcement Administration (DEA) officials revealed to the Financial Times that the suspects, allegedly part of a vast network laundering at least $50 million from fentanyl and methamphetamine proceeds in the US, examined multiple banks before selecting Citi. One senior official noted, “There are banks that pay less attention than others.”

Specific Incidents at Citibank ATMs

A second senior DEA official highlighted incidents involving Citibank ATMs: “I will name one [bank]. 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. 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.” Despite the absence of reporting requirements for individual transactions, the pattern should have raised suspicions, the official said.

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Legal Defense and Bank’s Response

The two men, Guillermo Zambrano and Luis Belandria-Contreras, have pleaded not guilty. Zambrano’s lawyer, John Targowski, stated that his client committed the alleged acts under duress due to debt and threats of kidnapping by a cartel member. Citi declined to comment on the specific case but asserted its “robust anti-money laundering policies” and commitment to cooperating with investigations.

Broader Context of Money Laundering Tactics

The indictment also mentions another defendant, Jiayong Yu, who allegedly deposited significant sums at JPMorgan Chase ATMs and teller windows. No accusations were made against Chase for failing to report these transactions. The broader issue of money laundering has seen Mexican drug traffickers and Chinese accomplices becoming more adept at using legitimate banking systems to launder cash. Martin Estrada, US attorney for the Central District of California, highlighted the symbiotic relationship between cartels and Chinese money-laundering groups.

Law enforcement officials acknowledge the increasing sophistication of money-laundering schemes, which now involve encrypted apps, cryptocurrency, and underground banking systems. The expansion of these activities has outpaced the capacity of law enforcement to effectively track and monitor them.


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