Trump’s Justice Department Goes Easy on Citigroup Unit for Criminal Money Laundering

By Pam Martens and Russ Martens: May 23, 2017

Scales of JusticeCitigroup, the Wall Street mega bank that taxpayers were forced to prop up in the largest bailout of a financial institution in U.S. history from 2008 to 2010, is also a recidivist lawbreaker that the U.S. Justice Department fails to tame regardless of who occupies the Oval Office.

Under the Obama administration, Citigroup was repeatedly fined by its Federal regulators for serious abuses of the law and its customers but only once was a felony count leveled against the bank. On May 20, 2015, Citicorp, a unit of Citigroup, pleaded guilty to a felony charge in connection with the rigging of foreign currency trading. (Three other banks, JPMorgan Chase, Barclays PLC and the Royal Bank of Scotland (RBS) also pleaded guilty to felony charges in the same matter. UBS, at the same time, pleaded guilty to rigging the interest rate benchmark known as Libor.)

Trump’s Justice Department is now raising eyebrows for handing another unit of Citigroup a non-prosecution agreement yesterday for egregious money laundering violations.

The Justice Department’s Acting Assistant Attorney General, Kenneth A. Blanco, announced yesterday that Banamex USA, a unit of Citigroup, was being given a non-prosecution agreement and forfeiting $97.44 million. Banamex USA agreed to admit to criminal violations for “willfully failing to file Suspicious Activity Reports (SARs).”

SARs are one of the most basic procedures that U.S. banks employ to guard against money laundering. And yet, the Justice Department found the following at Banamex USA:

“According to admissions contained in the NPA [non-prosecution agreement] and the accompanying statement of facts, from at least 2007 until at least 2012, BUSA [Banamex USA] processed more than 30 million remittance transactions to Mexico with a total value of more than $8.8 billion. During the same period, BUSA’s monitoring system issued more than 18,000 alerts involving more than $142 million in potentially suspicious remittance transactions. BUSA, however, conducted fewer than 10 investigations and filed only nine SARs in connection with these 18,000-plus alerts, filing no SARs on remittance transactions between 2010 and 2012.”

Equally disturbing about the Justice Department’s non-prosecution agreement is the fact that Citigroup and Banamex USA are only required to cooperate with the Justice Department on violations of federal money laundering statutes for a period of one year, or to report any evidence it has of money laundering for just one year.

Given Citigroup’s history in the arena of money laundering, one would have expected the Justice Department to wring much graver concessions from the bank.

In November 1999, the U.S. Senate’s Permanent Subcommittee on Investigations exposed the international money dealings at Citigroup’s commercial bank, Citibank. In his opening remarks, Senator Carl Levin explained how the bank operated:

“Today we are looking at the private bank of Citibank. It is the largest bank in the United States, and it has one of the largest private bank operations. It has the most extensive global presence of all U.S. banks, and it had a rogues’ gallery of private bank clients. Citibank has been private banker to:

“– Raul Salinas, brother to the former President of Mexico; now in prison in Mexico for murder and under investigation in Mexico for illicit enrichment; [Salinas had his murder conviction overturned on appeal and was released from prison in 2005.]

“– Asif Ali Zardari, husband to the former Prime Minister of Pakistan; now in prison in Pakistan for kickbacks and under indictment in Switzerland for money laundering;

“– Omar Bongo, President of Gabon; subject of a French criminal investigation into bribery;

“– sons of the General Sani Abacha, former military leader of Nigeria; one of whom is now in prison in Nigeria on charges of murder and under investigation in Switzerland and Nigeria for money laundering;

“– Jaime Lusinchi, former President of Venezuela; charged with misappropriation of government funds;

“– two daughters of Radon Suharto, former President of Indonesia, who has been alleged to have looted billions of dollars from Indonesia…

“– General Albert Stroessner, former President of Paraguay and notorious for decades for a dictatorship based on terror and profiteering.”

Robert L. Roach, Counsel to the Senate investigation, outlined during the hearing the services that Citibank had provided to Raul Salinas, brother to then President of Mexico, Carlos Salinas, as follows:

“The private bank…established a shell company for Mr. Salinas with layers of disguised ownership. It permitted a third party using an alias to deposit funds into the accounts, and it moved the funds out of Mexico through a Citibank concentration account that aided in the obfuscation of the audit trail. Cititrust in the Cayman Islands activated a Cayman Island shell corporation called a PIC, or private investment corporation, called Trocca, Ltd., to serve as the owner of record for the Salinas private bank accounts…

“Cititrust used three Panamanian shell companies to function as Trocca’s Board of Directors. Cititrust also used three Cayman Island shell companies to serve as Trocca’s officers and principal shareholders. Cititrust controls all six of these shell companies and routinely uses them to function as directors and officers of PICs that it makes available to private clients. Later, Citibank established a trust, identified only by a number, to serve as the owner of Trocca, Ltd. Raul Salinas was the secret beneficiary of the trust.

“The result of this elaborate structure was that the Salinas name did not appear anywhere on Trocca’s incorporation papers. The Trocca, Ltd. accounts were established in London and Switzerland…

“To accommodate Mr. Salinas’ desire to conceal the fact that he was moving money out of Mexico, Ms. [Amy] Elliott [a Relationship Manager at Citibank] introduced Mr. Salinas’ then-fiancee Paulina Castanon as Patricia Rios to a service officer at the Mexico City branch of Citibank. Operating under that alias, Ms. Castanon would deliver cashiers checks to the branch where they would be converted into dollars and wired into a concentration account in New York. The concentration account is a business account established by Citibank to hold funds from various destinations prior to depositing them into the proper accounts. Transferring funds through this account enables a client’s name and account number to be removed from the transaction, thereby clouding the audit trail. From there, the money would be transferred to the Trocca, Ltd. accounts in London and Switzerland…

“Between October 1992 and October 1994, more than $67 million was moved from Mexico to New York and then on to London and Switzerland by way of this system…Yet no one questioned Mr. Salinas about the origin of these funds. Far from inquiring about the sources of the funds, Ms. Elliott wrote to her colleagues in June 1993 that the Salinas account ‘is turning into an exciting, profitable one for us all. Many thanks for making me look good.’ ’’

Roach further expounded on how the Relationship Manager’s need to “please the client” trumped their responsibilities under the law, stating that “After Mr. Salinas was arrested, Hubertus Rukavina, the head of Citibank Private Bank at the time, suggested that the Salinas accounts in London be transferred back to Switzerland because they would be afforded more secrecy there.”

Amy Elliott, according to Roach, even advised Mrs. Salinas “that it might be wise to move the Trocca, Ltd. account out of Citibank because it might be more difficult for Mexican authorities to obtain account information from a non-U.S. bank.”

At one point during the hearing, Senator Levin questioned Amy Elliott on the transcript of a phone conversation she had with a colleague:

Senator Levin: “On another matter, the day after Mr. Salinas was arrested, you said the following: ‘Everybody was on board on this.’ Later, in the same conversation, you said, ‘I mean, this goes in the very, very top of the corporation this was known, Okay? On the very top.’ Then you said, ‘We are little pawns in this whole thing, Okay?’ Who were you referring to when you said ‘this goes in the very top of the corporation this was known’? Who are you referring to at the very top of the corporation”?

Amy Elliott: “Bill Rhodes…I am sitting four or five down from the chairman, and Bill Rhodes was and is the vice chairman of the bank. To me, that’s pretty top.”

If President Trump were serious about draining the swamp and making America great again, he would start with a Justice Department that knows how to flex its muscles against the serial lawbreakers on Wall Street.

Related Article:

Exclusive: Panama Papers Hub in Miami: Citigroup’s [Very] Private Bank

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