Banamex USA is the U.S. banking arm of Banamex (Banco Nacional de Mexico) Citigroup acquired in 2001 and has operated since. It holds $1 billion in assets and specializes in money transfers between the US and Mexico. The bank was has been popular for workers in the US sending remittances back home, and for agricultural businesses spread across the border with employees in both countries.
However, in recent years, both the Banamex and Banamex USA arms of Citigroup have been hit with accusations of fraud and weak controls to prevent money laundering.
Banamex admitted that its weak internal procedures allowed Oceanografia, a contractor to Pemex, to create fake invoices. Citigroup's consumer banking head, Manuel Medina-Mora whose career started at Banamex, was scarred by the scandal announced his plans to retire from Citigroup in February. His retirement from Citigroup took effect on Friday. In a somewhat odd turn of events, he returned to Banamex -- effectively Citigroup -- on Monday as a non-executive chairman.
Citi's possible move to close its Banamex USA operation was first reported by the Wall Street Journal.
Banamex USA is currently being investigated by number of domestic regulatory bodies including: the FDIC, California Department of Business Oversight, the Treasury Department's Financial Crimes Enforcement Network (FinCEN), and the Justice Department. However, regulators have not said that Citigroup has to close Banamex USA, the Wall Street Journal reported.
Citigroup declined to comment on speculation that it would be closing Banamex USA.
"Citi is fully cooperating with all inquiries into Banamex USA's Bank Secrecy Act and anti-money laundering program," Citi said in an emailed statement. "Citi and Banamex USA are committed to ensuring a strong and sustainable BSA/AML Compliance program."
Citigroup is not alone in winding down some of its operations in U.S. border towns. Last month the Wall Street Journal reported that JPMorgan Chase (JPM) closed several of its branches in Nogales, Arizona following concerns around money laundering. The concerns are tied to drug and human trafficking. The banks can be implicated for failing to identify suspicious persons and activities.