Raul Salinas, Citibank, and Alleged Money Laundering
OSI-99-1: Published: Oct 30, 1998. Publicly Released: Dec 4, 1998.
Pursuant to a congressional request, GAO provided information on Raul Salinas de Gotari, brother of the former President of Mexico, Carlos Salinas de Gotari, and his alleged involvement in laundering money out of Mexico through Citibank to accounts in Citibank affiliates in Switzerland and the United Kingdom, focusing on: (1) how Raul Salinas was able to transfer between $90 million and $100 million from Mexico into foreign accounts through Citibank and its affiliates; (2) what functions and assistance Citibank performed for Mr. Salinas; (3) whether Citibank's actions complied with applicable federal laws and regulations; and (4) a comparison of Citibank's practices during the Salinas transactions with its testimony in a 1994 money laundering trial.
GAO noted that: (1) Mr. Salinas was able to transfer $90 million to $100 million between 1992 and 1994 by using a private banking relationship formed by Citibank New York in 1992; (2) the funds were transferred through Citibank Mexico and Citibank New York to private banking investment accounts in Citibank London and Citibank Switzerland; (3) beginning in mid-1992, Citibank actions assisted Mr. Salinas with these transfers and effectively disguised the funds' source and destination, thus breaking the funds' paper trail; (4) Citibank: (a) set up an offshore private investment company named Trocca Private Investment, Co., to hold Mr. Salinas's assets, through Cititrust (Cayman) and investment accounts in Citibank London and Citibank Switzerland; (b) waived bank references for Mr. Salinas and did not prepare a financial profile on him or request a waiver for the profile, as required by then Citibank's know your customer policy; (c) facilitated Mrs. Paulina Salinas's use of another name to initiate fund transfers in Mexico; and (d) had funds wired from Citibank Mexico to a Citibank New York concentration account before forwarding them to Trocca's offshore Citibank investment accounts; (5) no U.S. documentation identified Mr. Salinas as Trocca's beneficial owner or connected Mr. Salinas to the Trocca funds transferred through Citibank Mexico and Citibank New York; (6) according to Citibank New York's Vice President for Legal Affairs, Citibank's actions violated only one aspect of the then Citibank know your customer policy; Citibank should have prepared a financial profile or waived the requirement before accepting Mr. Salinas as a customer; (7) by investigating his financial background, Citibank could have verified the source of Mr. Salinas's wealth and transferred funds; (8) limited by the ongoing Department of Justice investigation, GAO could not determine whether Citibank's actions violated law or regulation; (9) the Federal Reserve also did not comment on whether Citibank's actions were violations because information available to it at the time GAO inquired was insufficient for it to make a determination; (10) on the basis of the details GAO presented, the Office of the Comptroller of the Currency stated that the actions did not violate civil aspects of the Bank Secrecy Act; (11) further, private banking's know your customer policies are voluntary and not governed by law or regulation; and (12) a comparison of Citibank actions and Citibank testimony in the 1994 money laundering trial shows that the two were inconsistent concerning due diligence and know your customer practices in private banking.