Not Just Crypto, Citigroup Accused of Facilitating Drug Money Laundering

Besides cryptocurrencies, drug traffickers have reportedly opted to launder money through Citigroup, viewing the bank as accommodating due to perceived weaker fraud prevention measures.

According to US law enforcement officials, two Californians deposited large sums of cash at Citibank ATMs, raising money laundering concerns. They are reportedly linked to the Sinaloa drug cartel, one of the world’s most dominant drug trafficking organizations.

The Financial Times reported Monday that the two men, Guillermo Zambrano and Luis Belandria-Contreras, deposited nearly $36,000 in suspicious cash installments at Citibank ATMs in Jan. 2021.

The report details how they allegedly made multiple deposits of a few hundred dollars each. They did so with short intervals between transactions, potentially to avoid triggering anti-money laundering measures.

Citigroup declined to comment on the matter. However, the bank told Cryptonews that it has robust anti-money laundering policies to detect and report suspected money laundering activity.

“When we find evidence of such activity, we notify the authorities as required and fully cooperate with any investigation through appropriate legal processes,” it added.

Citigroup Oversight Weaknesses Highlighted

Prosecutors allege the men split the larger sum into numerous smaller deposits, each under $10,000. This approach, they believe, helped avoid triggering mandatory cash transaction reports that banks must file with the US Treasury.

Officials from the Drug Enforcement Administration told FT that the two individuals are suspected members of a large criminal organization. The organization laundered at least $50m from fentanyl and meth sales in the US. They reportedly surveyed multiple banks before selecting Citigroup.

One official pointed out that certain banks have looser oversight, implying Citigroup might have offered an easier path.

Also, the DEA official argued that the repeated small deposits were a cause for concern. Even if they fell below reporting thresholds, they should have been investigated further.

Crypto Not Exclusive Tool for Criminal Money Laundering

Cryptocurrencies are often scrutinized for illicit fund transfers. However, the FT report shows that criminals employ even traditional banking for money laundering or drug trafficking.

For years, law enforcement has been raising the alarm about Mexican drug cartels and their Chinese collaborators becoming increasingly skilled at using regular banks to clean their dirty money.

Just last month, US authorities warned that Mexican drug cartels are turning to cryptocurrencies to buy ingredients for fentanyl, a powerful opioid fueling America’s deadly addiction crisis.

Elizabeth Warren and other politicians have also called on the Biden Administration to provide updates on actions taken to address the illicit use of cryptocurrencies in fentanyl drug trafficking.