Banamex USA, you’re going to have to find a new place to do your business.
The L.A. bank has been hit with heavy fines and agreed to shut down because it hasn’t done enough to stop money laundering by drug gangs and other bad actors.
Banamex – which operates primarily around the U.S.-Mexican border – is owned by banking giant Citibank, which announced the settlement without admitting any wrongdoing. The company cites Banamex’s poor earnings as the reason for the closure.
In addition to shutting down the Banamex, Citigroup has agreed to pay $140 million in penalties. That includes a $100 million fine imposed by the Federal Deposit Insurance Corp., and a record $40 million fine from California’s Department of Business Oversight.
The long-running investigation into Banamex is part of a government crackdown on U.S. financial institutions whose lax controls could make them attractive to criminal organizations and overseas terror operations.
Three years ago, regulators ordered Banamex to beef up systems for detecting dirty money. Changes were made – including the ouster of top executives – but regulators say they didn’t go far enough. There have been a number of new violations.
Banamex has about a $1 billion dollars in assets and more than 350 employees in Century City, Houston and San Antonio. It operates just three branches, down from 11 a few years ago.
The announcement about Banamex caps an expensive week for Citigroup. On Tuesday, the bank was ordered to return $700 million to customers and pay a $70 million fine for deceiving credit card customers.