After BNP, U.S. targets range of firms in crackdown on illicit money flows

BNP Paribas’ guilty plea and agreement to pay nearly $9 billion for violating U.S. sanctions is part of a larger U.S. Justice Department shift in strategy that is expected to snare more major banks and other firms across the financial food chain.

Two other major French banks, Credit Agricole and Societe Generale, Germany's Deutsche Bank AG, and Citigroup Inc's Banamex unit in Mexico are among those being investigated for possible money laundering or sanctions violations, according to people familiar with the matter and public disclosures.

The Justice Department and other U.S. authorities, including the Manhattan District Attorney, are probing

Credit Agricole and Societe Generale for potentially violating U.S. economic sanctions imposed against Iran, Cuba and Sudan, one of the sources said.

Credit Agricole and SocGen have disclosed that they are reviewing whether they violated U.S. sanctions. SocGen said in its latest annual report that it is engaged in discussions with the Treasury Department’s Office of Foreign Assets Control over potential sanctions violations. The two banks could not be immediately reached for comment.

Another source said the Justice Department's bank integrity unit is deep into a probe of whether Citigroup's Banamex operation failed to police money transfers across the U.S.-Mexico border. Citigroup has said it is cooperating with the inquiry, which also involves the Federal Deposit Insurance Corp. Citigroup spokeswoman Molly Meiners declined comment.

Separately, Citigroup is investigating an alleged fraud involving $565 million in loans at Banamex and as a result of that has fired a dozen employees.

Prosecutors have also investigated potential sanctions breaches at Deutsche Bank, according to people familiar with the probe, though it is unclear how far that has progressed. The bank said in its last annual report that it had received requests for information from regulatory agencies and is cooperating with them. It didn't immediately respond to a request for comment.

The timing of any possible legal action or related settlement negotiations is unclear.

The pipeline of cases has built up as U.S. prosecutors have pivoted from focusing on specific criminals to also vigorously pursuing the financial institutions that move money for them.

At the heart of this effort is a 12-prosecutor Money Laundering and Bank Integrity Unit within the Justice Department that was created in 2010. It handled the investigation into BNP for U.S. sanction law violations, primarily involving Sudan deals, as well as large money laundering and sanctions cases in recent years against HSBC Holdings Plc, ING Bank N.V. and others.

Leslie Caldwell, who leads the criminal division at Justice Department, said in an interview that the unit has its sights set on a range of firms potentially involved in illicit money flows.

"I think that we'll probably see other financial institutions, regional banks, maybe some smaller banks, and I think we're also going to be seeing, as we have already started to see, more online activity," Caldwell said during an interview on Friday, speaking of cases in the pipeline.

Reuters