The U.S. Justice Department is investigating whether a Citigroup unit in California failed to alert the government to suspicious banking transactions along the U.S.-Mexico border that in some cases involved suspected drug-cartel members, said people familiar with the probe.
The Wall Street Journal reports that U.S. prosecutors want to know why Citigroup didn't submit so-called suspicious-activity reports flagging the questionable transactions, one of these people said.
The focus of the federal probe highlights the breadth of problems faced by Citigroup following the Federal Reserve's recent rejection of its capital plan and revelations of potential fraud in a separate Mexican unit called Grupo Financiero Banamex.
Citigroup disclosed in February that it had cut its fourth- quarter and full-year results by about $235m after the bank investigated its dealings with a Mexican oil-services company, Oceanografía SA de CV, and found an apparent gap of $400m in an account that owed money to Citigroup's Mexican unit. U.S. prosecutors are examining whether any criminal violations occurred.
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