Citigroup shuts Banamex USA, pays US$140m in fines

[NEW YORK] Citigroup said Wednesday it will shut the US branch of its Mexican subsidiary Banamex and pay US$140 million in fines for inadequate programmes to combat money laundering.

Citigroup said it had opted to close Banamex USA after concluding it "has not been able to operate to the scale necessary to generate consistent quality earnings." Operations of Banamex USA will be wound down "subject to a satisfactory liquidation plan," Citigroup, the fourth-largest US bank by assets, said in a statement.

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.

Those failings flouted requirements under a 2012 consent order between Banamex USA and the Federal Deposit Insurance Corporation and the California agency.

"Banamex agreed three years ago to correct numerous weaknesses in its anti-money laundering programme. It has failed to do so," said Jan Lynn Owen, commissioner of the California agency, in a separate statement.

"This new agreement holds Banamex appropriately accountable for its continued violations."

The move affects 300 workers in California and Texas. Banamex USA has assets just over US$500 million and deposits of about US$460 million, Citigroup said.

Citigroup said it was focused on working with affected employees to locate jobs "both inside and outside of Citi." Citigroup has faced a number of probes over Banamex after it announced a charge of about US$235 million in February 2014 due to uncovering "significant" fraud on the books of oil contractor Oceanografia after having lent it US$585 million through a Banamex unit.

AFP