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Senior U.S. law enforcement officials say drug traffickers chose to launder their money through Citigroup because they considered the bank’s less strict anti-fraud measures “preferable.”
In an indictment unsealed last week, U.S. prosecutors detailed how two California residents who allegedly worked with the notorious Sinaloa cartel deposited tens of thousands of dollars at Citi ATMs.
The suspect allegedly inserted a total of approximately $36,000 worth of illegal cash into the machine at least three times in January 2021, waiting just a minute or two between transactions, several hundred dollars at a time.
Prosecutors allege that by splitting the amount into dozens of smaller deposits, the bank fell below the $10,000 threshold at which it must report cash transactions to the U.S. Treasury.
DEA officials told the Financial Times that the men, allegedly part of a larger criminal network that laundered at least $50 million worth of fentanyl and methamphetamine profits in the United States, researched several banks before choosing Citi.
“Some banks have been paying less attention than others,” one senior official said.
“To name one,” a second senior DEA official said. [bank]”In this study, we found two cases where cash couriers made 24 consecutive deposits into Citibank ATMs totaling $16,000. We also found one case where cash couriers made 15 consecutive deposits into Citibank ATMs totaling $20,000. They find an advantage for themselves.”
Individual transactions aren’t required to be reported, but a pattern of deposits should raise suspicions, DEA officials said.
Guillermo Zambrano and Luis Belandria Contreras said, “Definitely. [the deposits] “We try to stay below the threshold so that no red flags are raised, but I think 24 consecutive deposits by the same person, totalling $16,000, would raise some red flags,” the senior official added.
Bellandria Contreras’ lawyer did not respond to a request for comment. Zambrano’s lawyer, John Targowski, said his client committed the crimes because he was in debt and had received kidnapping threats from cartel members, and that he intended to “pursue a duress defense.” Both men have pleaded not guilty.
Citi declined to comment on the matter, citing confidentiality obligations regarding transaction reports. It said the bank has “robust anti-money laundering policies,” adding that “if we encounter evidence of such activity, we will report it to authorities, as appropriate, and cooperate fully with any investigations through appropriate legal processes.”
The indictment also details how another defendant, Jiayong Yu, allegedly deposited checks at a JPMorgan Chase ATM and “approximately $100,000 in U.S. dollars” at a Chase bank teller last year. There is no indication that Chase failed to report the transactions. Chase declined to comment. Yu has pleaded not guilty to related charges. His lawyer did not respond to requests for comment.
Law enforcement officials have warned for years that Mexican drug traffickers and their Chinese accomplices have become increasingly skilled at laundering money through the legitimate banking system.
“We’re seeing a surge in money, with cash being deposited in banks and then sent elsewhere,” one DEA official said, adding that tens of thousands of dollars were being sent to China each month through a money transfer agency in Flushing, New York.
In 2012, the Department of Justice fined HSBC $1.9 billion for failing to prevent Mexican cartels from laundering money after an investigation found that hundreds of thousands of dollars were being banked through its Mexican branches every day.
Prosecutors said the drug traffickers “designed a specially shaped box to perfectly fit the dimensions of the window.”
Since then, their money laundering schemes have become much more sophisticated, using encrypted apps, cryptocurrencies and mirror transactions in China’s underground banks to cover their tracks through mutually beneficial arrangements with Chinese nationals in the United States.
“Drug cartels are desperate to bring the cash they make from selling drugs in the United States back to Mexico,” Martin Estrada, U.S. Attorney for the Central District of California, said last month.
“Meanwhile, Chinese money laundering groups are in the business of helping wealthy Chinese nationals get cash into this country and circumvent China’s export controls on moving cash,” Estrada added. The explosion in fentanyl trafficking has resulted in a “virtually limitless supply of cash,” he added.
Tracking this trade has been difficult for law enforcement: “The growth and expansion of this trade has exceeded the scope of law enforcement’s ability to track and monitor it,” one DEA official said.
