Mexican drug cartels could be taking advantage of lax oversight at Bank of America and Charles Schwab to launder their money, prompting a bank regulator probe.
The Securities and Exchange Commission is investigating whether the two financial firms didn’t look into their clients’ connections to drug money, according to a Reuters report.
The SEC is investigating whether money gained from drug trafficking or other crimes made its way into the US financial system.
Regulators found that one Texas rancher transferred funds from a Schwab account to another controlled by a shell company with drug ties and fake addresses, according to the report.
This isn’t the first time a bank was caught aiding narcotics rings.
Last year, HSBC paid $1.9 billion in fines for helping Mexican drug lords, as well as doing business with unsavory countries like Iran and Libya.
It’s not clear what penalties BofA or Schwab may face.
“All of us at Schwab are troubled by the suggestion that we are not complying with anti-money laundering regulations,” said Sarah Bulgatz, a Schwab spokeswoman. “In addition to a variety of controls, such as striving to know our customers, we do not accept cash to fund a brokerage account.”
Bill Holden, a spokesman for Bank of America, and Christina D’Amico of the SEC declined to comment.