The Strategist

Citigroup Suspected of Money Laundering

08/18/2015 - 15:26

US Department of Justice will examine the transactions of Citigroup bank with companies associated with the Mexican billionaire Carlos Hank Rhon. According to documents that got to Bloomberg, the American authorities are investigating possible money laundering in the Mexican branch of Citigroup Banco Nacional de Mexico.

US Department of Justice will examine the transactions of US bank Citigroup Inc. with companies owned by Mexican billionaire Carlos Hank Rhon. This was reported by Bloomberg, referring to the documents that were available to its journalists.

US authorities have requested Citigroup securities for transactions that are related to Hank Rhon’s four companies. Among them are two units Grupo Financiero Interacciones SA and Grupo Hermes SA, each of which is owned by the businessman and his family. In addition, Citigroup have been requested for documents related to Banco Monex, that, although, has no relation to Mr. Rhon. As stated, this examination is associated with the investigation in respect of the Mexican division of Citigroup Banco Nacional de Mexico (Banamex), which is suspected of money laundering. The Ministry of Justice wants to know if someone from the customers of the bank is in the illegal activity. As for Hank Rhon and his business, they are out of suspicion of US authorities.

Recall that Banamex has already been convicted of financial fraud. For example, in October last year, Mexican authorities fined the bank $ 2.2 million for violation of the rules of lending. Then for all the conglomerate, it led to the loss of $ 235 million by the end of 2013. Banco Nacional de Mexico is one of the major divisions of Citigroup, providing up to 10% of revenue to the American financial institution.

Neither the representatives of Citigroup, nor the Department of Justice commented on the current investigation.

As reported in mid-June by agency Reuters, the US bank Citigroup sent its customers a letter in which informed them of the intention to transfer the headquarters of its European division retail operations from London to Dublin. Headquarters of Citibank International Limited, which manages the bank's branches in 20 European countries will be moved in Ireland. "From a strategic perspective, Citi’s move to a single pan-European bank must reduce costs, ease operating and the regulatory burden and mitigate capital requirements", - says the bank’s statement. According to experts, most likely, the main cause of the shifting is that the capital requirements in the UK are harder than in other European countries. In April this year, HSBC has once again stated that it is considering the transfer of its headquarters outside the UK because of the tax climate.

The Citi said that the transfer of the headquarters would not entail job losses and that the leadership of the European retail division will remain in London. "The main reason (for the move) - simplification, it reflects Citi’s strategy to create more simple, reliable and stable institution," - added the bank’s representative. Citi denied speculation that the move to Ireland is linked to the planned referendum on quitting EU in 2017. Many companies are concerned about the possible results of the referendum. Last week, rating agency S&P lowered the outlook on the sovereign rating of the UK from "stable" to "negative." The agency believes that the UK could lose its AAA rating, if people on the referendum decide for the country's withdrawal from the EU, which will significantly worsen the situation in the British economy.