Toothless Federal Reserve Enforcement Action

… hands Citigroup/Banamex a Pass over Drug Money Laundering – Published on Dissident Voice, by Tom Burghardt, April 7, 2013.

In October 2005, at the height of the speculative financial bubble that eventually cost taxpayers trillions of dollars and devastated millions of lives, Citigroup Equity Strategy analysts Ajay Kapur, Niall Macleod and Narendra Singh published their provocative, though accurate portrayal of bourgeois amorality, Plutonomy: Buying Luxury, Explaining Global Imbalances

According to these worthies, the egregious economic disparities between the filthy ruling rich and the rest of us revolve around the salient fact that the “world is dividing into two blocs–the plutonomies where economic growth is powered by and largely consumed by the wealthy few,” and the great mass of proletarians who need to sit down, shut up … //

… ‘Dark Alliance’ 2.0:

  • Although journalists and researchers have spent decades documenting the links between secret state intelligence agencies like the CIA and organized crime conglomerates who butter their bread through global narcotics rackets, the role of major financial institutions in the grisly trade continues to be relegated by corporate media to the realm of “conspiracy theory.”
  • But in the wake of rising public anger over the Obama administration’s collusion with Wall Street drug banks, we were informed by The New York Times that the “Federal Reserve hit Citigroup with an enforcement action on Tuesday over breakdowns in money laundering controls that threatened to allow tainted money to move through the United States.”
  • According to the Times, the Federal Reserve “took aim at Citigroup and its subsidiary Banamex USA over failure to monitor cash transactions for potentially suspicious activity.”
  • The Fed’s Consent Order charged that Citigroup and Banamex USA “lacked effective systems of governance and internal controls to adequately oversee the activities of the Banks with respect to legal, compliance, and reputational risk related to the Banks’ respective BSA/AML [Bank Secrecy Act/Anti-Money Laundering] compliance programs.”
  • An unnamed bank spokeswoman told the Times, “Citi has made substantial progress in a comprehensive manner across products, business lines and geographies,” and will continue “to take the appropriate steps to address remaining requirements and build a strong and sustainable program.”

Nothing to see here, right?

  • Tellingly however, neither Citigroup nor Banamex USA admitted wrongdoing. In what is standard boilerplate in such agreements, the Fed meekly submitted that their “enforcement action” was issued “without this Order constituting an admission or denial by Citigroup of any allegation made or implied by the Board of Governors.” Nor did the Fed “give specific examples of problems” at either bank, Reuters reported.
  • During Senate Banking Committee hearings last month, Senator Elizabeth Warren (D-MA) grilled federal banking regulators over their non-prosecution of Wall Street drug banks.
  • Referencing penalties levied against HSBC after the British banking giant was caught red-handed laundering billions of dollars for Colombian and Mexican drug cartels, Warren demanded: “What does it take? How many billions of dollars do you have to launder for drug lords” before a criminal prosecution?
  • Judging by the actions of Obama’s Justice Department, apparently the sky’s the limit.
  • But if history is any guide to current Citigroup “lapses,” you can bet that the bank’s balance sheet is awash with dirty money.
  • As a prelude to the Federal Reserve’s Consent Order, last April the Office of the Currency (OCC) issued a cease-and-desist order charging Citigroup with “deficiencies in its BSA/AML compliance program.”
  • OCC regulators stated that the bank had “failed to adopt and implement a compliance program that adequately covers the required BSA/AML program elements due to an inadequate system of internal controls and ineffective independent testing.”
  • According to OCC, Citigroup “did not develop adequate due diligence on foreign correspondent bank customers and failed to file Suspicious Activity Reports (‘SARs’) related to its remote deposit capture/international cash letter instrument activity in a timely manner.”
  • In their infinite wisdom, the Federal Reserve did not include fines against the bank, but the Board of Governors hastened to assure Citigroup’s masters (their future employers?) that the Consent Order was issued “solely for the purpose of settling this matter without a formal proceeding being filed and without the necessity for protracted or extended hearings or testimony.”
  • You bet it was!

Citigroup and Banamex: The Salinas Affair: … //

… In late 2000, when the Senate Permanent Subcommittee on Investigations again began looking into drug money laundering allegations against Citibank, they received information from Argentine legislators who claimed there was “a gigantic political-financial conspiracy involving even Citibank President John Reed.”

Years later, those suspicions were corroborated when a US investigation, Operation Casablanca, “revealed that [money from] the Juárez cartel entered Argentina through two Citibank accounts and others in shell banks in the Cayman Islands and the Bahamas.”

Juan Miguel Ponce, the head of Mexico’s Interpol branch, “took advantage of Operation Casablanca to explore the vein of Juárez cartel allies in Argentina. He claims to have discovered documents in Mexico proving that large contributions were made by the cartel to 1999 campaign in Argentina of Peronist presidential and vice presidential candidates Eduardo Duhalde and Ramon ‘Palito’ Ortega,” Proceso disclosed

As James Petras reported in 2001, when Salinas was arrested “and his large-scale theft of government funds was exposed, his private bank manager at Citibank, Amy Elliott, said in a phone conversation with colleagues (the transcript of which was made available to Congressional investigators) that ‘this goes [on] in the very, very top of the corporation, this was known … on the very top. We are little pawns in this whole thing’.”

Fast forward twelve years: More than 120,000 Mexican citizens have paid with their lives as a result of the grisly trade and the American people are still the pawns of “plutonomic” banksters whose “wealth waves” come from the perverse influence bought by oceans of drug money flowing through a thoroughly corrupt capitalist system.
(full long text).

(Tom Burghardt is a researcher and activist based in the San Francisco Bay Area. His articles are published in many venues. He is the editor of Police State America: U.S. Military “Civil Disturbance” Planning, distributed by AK Press. Read other articles by Tom, or visit Tom’s website).


Recently in Tom Burghardt Category, on Uncommon Thought Journal, March 30, 2013;

Smart Cards in a Surveillance Society: The Implanted Radio-Frequency Identification Chip: RFID tags implanted in physical objects or human beings, on Global, by Tom Burghardt, Feb, 2, 2013;

Board of Governors of the Federal Reserve System, Enforcement Action;

THIRD WORLD TRAVELER is an archive of articles and book excerpts that seek to tell the truth about American democracy, media, and foreign policy, and about the impact of the actions of the United States government, transnational corporations, global trade and financial institutions, and the corporate media, on democracy, social and economic justice, human rights, and war and peace, in the Third World, and in the developed world …;

U.S. Banks and the Dirty Money Empire, on Third World Traveler, by James Petras (Dollars and Sense magazine), September /October 2001;

on en.wikipedia:

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