Drug traffickers chose Citibank for money laundering due to its perceived lenient fraud controls, according to senior US law enforcement officials.
An indictment unsealed last week detailed how two California residents, allegedly linked to the Sinaloa cartel, deposited tens of thousands of dollars at Citibank ATMs. In January 2021, the individuals reportedly deposited nearly $36,000 in illicit funds over three separate occasions, each time breaking the sum into smaller deposits to avoid detection. By making deposits below the $10,000 threshold, they evaded mandatory reporting to the US Treasury.
Drug Enforcement Administration (DEA) officials informed the Financial Times that the suspects, part of a network laundering over $50 million in fentanyl and methamphetamine proceeds, evaluated several banks before selecting Citibank.
“There are banks that pay less attention than others,” said one senior official. Another senior DEA official stated, “In this investigation, there were instances where money couriers made multiple back-to-back deposits totaling $16,000 and $20,000 at Citibank ATMs. They identify banks that are more favorable to them.”
Despite individual transactions not triggering reporting requirements, the pattern should have raised alarms, noted the DEA official. The suspects—Guillermo Zambrano and Luis Belandria-Contreras—tried to keep deposits below the threshold to avoid detection, but multiple back-to-back deposits should have alerted the bank, added the official.
A lawyer for Belandria-Contreras did not respond to requests for comment. Zambrano’s lawyer, John Targowski, said his client engaged in the alleged activities due to debt and threats from a cartel member, and plans to pursue a duress defense. Both have pleaded not guilty.
Citibank declined to comment on the specific case, citing secrecy requirements, but asserted it has “robust anti-money laundering policies” and cooperates fully with authorities.
The indictment also described another defendant, Jiayong Yu, who deposited a cashier’s cheque and approximately $100,000 in cash at JPMorgan Chase branches last year. There was no indication that Chase failed to report the transactions. Chase declined to comment, and Yu has pleaded not guilty. His lawyer did not respond to requests for comment.
Law enforcement officials have long warned that Mexican drug traffickers and their Chinese accomplices have become increasingly adept at laundering money through legitimate banking systems. The DEA official noted a significant increase in cash deposits in banks, with tens of thousands of dollars being sent back to China monthly through money transfer institutions in Flushing, New York.
In 2012, the Department of Justice fined HSBC $1.9 billion for failing to prevent money laundering by Mexican cartels. Hundreds of thousands of dollars were deposited daily at HSBC Mexico branches, with drug traffickers using specially designed boxes to fit teller windows.
Money-laundering schemes have since grown more sophisticated, involving Chinese nationals in the US using encrypted apps, cryptocurrency, and mirror transactions in underground Chinese banks. Martin Estrada, the US attorney for the Central District of California, highlighted the desperation of cartels to repatriate cash from US drug sales to Mexico and the involvement of Chinese groups in circumventing Chinese cash export controls.
Tracking these transactions remains challenging for law enforcement. “The growth and expansion of this has surpassed what law enforcement can track and monitor,” the senior DEA official said.