Citibank In Laundering Probe

Citibank transferred as much as $100 million in alleged drug money for the brother of a former Mexican president without checking the source of the funds, a report for Congress finds.

CBS News Correspondent Ed Crane reports that the General Accounting Office, the investigative arm of Congress, found that Citibank ignored its own internal safeguards against money laundering by failing to look into the source of the funds.

Citibank "facilitated a money-managing system that disguised the origin, destination, and beneficial owner of the funds," according to the report.

The findings could prompt congressional hearings on Citibank next year, officials told The Washington Post. It could also lead the Justice Department, which has been investigating Citibank's handling of Raul Salinas' money for three years, to speed up its probe into whether the bank broke any criminal laws.

Raul Salinas is the eldest brother of Carlos Salinas de Gortari, who held the Mexican presidency from 1988 to 1994. Rumors were prevalent that Raul Salinas was linked to drug lords and had dubious sources of income. The report faults Citibank for asking few questions when Raul Salinas sought to make the financial transaction.

The report cites a Citibank representative saying, "Citibank New York's Mexican Division believed that all of Mr. Salinas' funds had been obtained legally, with a large portion resulting from the sale of a construction company he owned."

"However, Citibank reportedly knew no details about the construction company, including its name, who had purchased it, or the amount of money generated by the sale," the report says.

From 1992 to 1994, Raul Salinas' wife hand-carried checks to Citibank Mexico, which were transferred to Switzerland through a series of complex transactions that hid the source of the funds.

A Citibank spokesman said the GAO report "contains errors of fact and interpretation" but said the bank would cooperate fully with law enforcement authorities.

A bank statement also said the report "ignores recent progress in strengthened law and industry procedures, which Citibank strongly supports in keeping with our commitment to combat money laundering, to comply with the letter and spirit of related laws and to continually strengthen our procedures everywhere we operate."

Salinas was arrested in 1995 on charges of masterminding the killing of a top ruling-party official. He is still in prison.