Raul Salinas, Citibank, and Alleged Money Laundering
T-OSI-00-3: Published: Nov 9, 1999. Publicly Released: Nov 9, 1999.
Pursuant to a congressional request, GAO discussed its 1998 investigation of alleged illegalities involving Raul Salinas de Gotari, brother of the former President of Mexico, Carlos Salinas de Gotari, and a U.S. bank, Citibank.
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, to hold Mr. Salinas' 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 know your customer policy; (c) facilitated Mrs. Patricia Paulina Salinas' 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--a business account that commingles funds from various sources--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; (7) Citibank should have prepared a financial profile or waived the requirement before accepting Mr. Salinas as a customer; (8) by investigating his financial background, Citibank could have verified the source of Mr. Salinas' wealth and transferred funds; (9) limited by the ongoing Department of Justice investigation, GAO could not determine whether Citibank's actions violated law or regulation; (10) 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; (11) however, the Office of the Comptroller of Currency stated that the actions did not violate civil aspects of the Bank Secrecy Act; (12) private banking's know your customer policies were then voluntary and not governed by law or regulation; and (13) 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.