Citigroup shuts Banamex USA, pays $140 mn in fines

New York finance giant Citigroup Inc. announced Wednesday it will shut down its Los Angeles subsidiary Banamex USA after agreeing to a $140 million settlement with federal and California regulators over the bank’s failure to adequately monitor possible money laundering.

The California Department of Business Oversight said the fines were needed because Banamex USA continued to engage in new violations of federal bank secrecy and money laundering rules. Banamex USA had $1.5 billion of assets at the end of 2012, and at one point as many as 11 branches, eight of which were closed in 2013.

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For several years, banking regulators had been citing Banamex USA for shortcomings in its efforts to guard against money laundering.

Banamex, headquartered in the north tower of Century City’s Century Plaza, specialized in moving money between the United States and Mexico.

A bank spokeswoman declined to comment on the status of that criminal investigation. The bank agreed to pay the fine to settle the case, the FDIC said. Banamex is the second-largest bank in Mexico, behind BBVA Bancomer, and has operated as a subsidiary of Citigroup since the U.S.-based bank bought it in 2001. Citi said on Wednesday that the wind-down of retail and commercial banking at the unit was in line with plans to simplify its business model.

Wednesday’s settlement comes a day after Citi’s consumer bank was ordered by the U.S. Consumer Financial Protection Bureau to pay $770 million for illegal credit card practices.

As Compliance Week previously reported, Citigroup said in an annual filing with the Securities and Exchange Commission in February that it was under investigation by the Financial Crimes Enforcement Network and the CDBO for BSA and AML violations at Banamex USA.