Feds probe Citigroup over $400M fraud involving Banamex

Federal authorities have reportedly launched a criminal probe into Citigroup for a recent $400 million fraud involving its Mexican unit.

The investigation, led by the FBI and prosecutors from the US Attorney’s Office in Manhattan, focuses on the company’s Banamex unit after a massive fraud scheme was uncovered there, The New York Times reported Wednesday night.

Citigroup is facing the new scrutiny as a number of criminal probes into the company are already under way. Also, the bank is still tainted from the housing crisis and financial collapse of 2008.

In the new probe, investigators are trying to determine whether inefficiencies in the company led to the fraud or whether the criminal activities could have been prevented by Citigroup, the paper said.

The company disclosed the fraudulent activity by its Mexican subsidiary in February.

Citigroup had already launched its own internal inquiry, and the bank’s lawyers presented their findings at a meeting last month, the Times said.

Neither Citigroup nor a spokesperson for US Attorney Preet Bharara would confirm the criminal probe, the paper said.

The massive scheme involving an oil company was hatched in Mexico and lost the bank millions of dollars.

The fraud was traced to a single Banamex employee, but authorities are looking into the possibility that it involved co-conspirators in Citigroup’s US offices, according to the Times.

The bank is also under investigation in Massachusetts, where prosecutors are looking into whether it did not provide proper safeguards to prevent money laundering.