Citigroup and its Mexican subsidiary have received grand jury subpoenas from federal prosecutors over issues of compliance with anti-money-laundering and bank secrecy laws, the bank disclosed on Monday.
The disclosure in the bank’s annual securities filing comes after Citigroup said its Mexican unit Banamex had been defrauded of as much as $400 million.
The grand jury subpoenas were issued by the United States attorney’s office in Massachusetts.
Banamex USA also received a subpoena from the Federal Deposit Insurance Corporation related to the Bank Secrecy Act and anti-money-laundering program, Citigroup said.
The purported fraud stems from a $585 million accounts receivable program Banamex had offered to an oil supply company, Oceanografia, in Mexico. Invoices for work Oceanografia was supposed to have completed were falsified, according to Citigroup. A person briefed on the matter said it was suspected that a Banamex employee was involved in the fraud.
Citigroup’s chief executive, Michael L. Corbat, said in a memo to employees that it was unclear how many people were involved.
The investigations indicate that the purported fraud in Mexico could have larger legal ramifications for the bank, which has been trying to put many of its problems related to the financial crisis behind it.
The Securities and Exchange Commission and the Federal Bureau of Investigation are also looking into the mater, people briefed on the matter said on Friday.
Citigroup said it was cooperating fully with all the inquiries.
