Drug Traffickers Exploited Citigroup ATMs For Money Laundering

Drug traffickers chose to launder money through Citigroup Inc C because they believed the bank had less stringent fraud controls, according to senior U.S. law enforcement officials, the Financial Times reports.

In a recent indictment, U.S. prosecutors detailed how two California residents, allegedly linked to the Sinaloa cartel, deposited tens of thousands of dollars into Citi ATMs.

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The duo allegedly deposited almost $36,000 in January 2021 in increments below the $10,000 threshold that triggers reporting to the U.S. Treasury, avoiding detection by splitting the sum into dozens of smaller deposits.

Citing the Drug Enforcement Administration (DEA), the FT highlighted the duo, Guillermo Zambrano and Luis Belandria-Contreras, were part of a larger network that laundered over $50 million in fentanyl and methamphetamine proceeds in the U.S.

They reportedly scouted several banks before deciding on Citi. A senior DEA official stated that the pair made multiple back-to-back deposits, a pattern that should have raised suspicions.

Despite this, Citi’s systems did not flag the transactions, the Financial Times report added.

The indictment also implicated another defendant, Jiayong Yu, who allegedly deposited a cashier’s check and $100,000 at JPMorgan Chase JPM ATMs. Chase was not suggested to have failed in flagging the transaction. Yu has pleaded not guilty.

Law enforcement officials have long warned that Mexican drug traffickers and Chinese accomplices are increasingly adept at laundering cash through legitimate banking channels.

The Department of Justice fined HSBC Holdings plc HSBC $1.9 billion in 2012 for failing to prevent cartel money laundering, highlighting the evolving sophistication of these schemes.

Martin Estrada, U.S. Attorney for the Central District of California, explained that Chinese money-laundering groups help wealthy Chinese nationals obtain cash in the U.S. to circumvent Chinese export controls, creating a mutually beneficial arrangement with drug cartels, the FT report added.

This collaboration has resulted in vast amounts of illicit cash, driven by the surge in fentanyl trafficking. Monitoring these transactions has become increasingly challenging for law enforcement as the schemes grow more sophisticated.

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Price Action: C shares are up 1.01% at $64.07 at the last check on Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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