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According to senior US law enforcement officials, drug traffickers chose to launder money through Citigroup because they believed the bank was “more favorable” and had less stringent fraud controls.
In an indictment unsealed last week, U.S. prosecutors detailed how two California residents, allegedly working with the notorious Sinaloa cartel, deposited tens of thousands of dollars into Citi ATMs.
On at least three separate occasions in January 2021, they allegedly inserted a total of nearly $36,000 in illegal cash into the machines, a few hundred dollars at a time, waiting only a minute or two between each transaction.
By dividing the amount into dozens of smaller deposits, prosecutors say they stayed below the $10,000 threshold that banks must use to report cash transactions to the U.S. Treasury Department.
Drug Enforcement Administration officials told the Financial Times that the duo, who were allegedly part of a large criminal network that cleared at least $50 million in fentanyl and meth proceeds across the US, had investigated several banks before choosing Citi.
A senior official said: “There are banks that pay less attention than others.”
A second senior DEA official said: “I’ll name one [bank]. There were two instances in this study where we had cash couriers make 24 consecutive deposits totaling $16,000 at a Citibank ATM. . . There were 15 consecutive deposits totaling $20,000, also at a Citibank ATM. . . They figure out which places are more favorable for them.”
Although there were no reporting requirements for the individual transactions, the pattern of the deposits should have raised suspicion, the DEA official said.
The two men — Guillermo Zambrano and Luis Belandria-Contreras — “absolutely tried to [the deposits] “The amount has to be below the threshold so as not to raise red flags, but I would imagine that 24 consecutive deposits by the same person, totaling $16,000, would raise some sort of red flag,” the senior official added.
An attorney for Belandria-Contreras did not respond to a request for comment. A lawyer for Zambrano, John Targowski, said his client only carried out the alleged actions because he was in debt and threatened with kidnapping by a cartel member, and that he planned to “mount a coercion defense.” Both have pleaded not guilty.
Citi declined to comment on the specific case, citing confidentiality requirements around transaction reporting. The bank said it had “robust anti-money laundering policies,” adding: “If we find evidence of such activity, we will notify the authorities as required and fully cooperate with any investigation through appropriate legal processes.”
The indictment also details how another suspect, Jiayong Yu, allegedly deposited a cashier’s check at a JPMorgan Chase ATM and “approximately $100,000 in U.S. dollars at a Chase Bank teller window” last year. There was no indication that Chase had not flagged the transaction. Chase declined to comment. Yu has pleaded not guilty to related charges. His attorney did not respond to a request for comment.
Law enforcement officials have warned for years that Mexican drug traffickers and Chinese accomplices are becoming increasingly adept at laundering money through the legal banking system.
“We’re seeing a huge increase in cash, cash being deposited in banks and then transferred wherever it is,” the first senior DEA official said. They added that tens of thousands of dollars were being sent back to China every month through money transfer institutions in Flushing, New York.
In 2012, the Justice Department fined HSBC $1.9 billion for failing to prevent money laundering by cartels in Mexico. An investigation found that hundreds of thousands of dollars were being deposited into the bank daily through HSBC Mexico branch counters.
According to prosecutors, drug traffickers even designed “specially shaped boxes that precisely fit the dimensions of the counters.”
The money laundering schemes have since become much more sophisticated, including through a mutually beneficial arrangement with Chinese nationals in the US who use encrypted apps, cryptocurrencies and mirror transactions in underground Chinese banks to cover their tracks.
“The cartels are desperate to move the money they make from selling drugs in the United States back to Mexico,” Martin Estrada, the U.S. attorney for the Central District of California, said last month.
“The Chinese money laundering groups, on the other hand, are helping wealthy Chinese nationals obtain cash in this country to circumvent China’s export controls on cash movements.” Thanks to the explosion in fentanyl trafficking, this results in “virtually unlimited amounts of cash,” Estrada added.
Tracking such transactions has proven difficult for law enforcement. “The growth and the expansion of this,” the first senior DEA official said, “is beyond what law enforcement can track and monitor.”