Private Banking: Raul Salinas, Citibank, and Alleged Money Laundering: OSI-99-1.

Raul Salinas, brother of the former President of Mexico, was able to transfer as much as $100 million between 1992 and 1994 by using a private banking relationship with Citibank New York. The money was transferred through Mexico and New York to private banking investment accounts in London and Switzerland. Beginning in mid-1992, Citibank assisted Mr. Salinas with these transfers and effectively disguised the funds' source and destination, thus breaking the funds' paper trail. Citibank set up an offshore private investment company to hold Mr. Salinas' assets, waived bank references for Mr. Salinas and did not prepare a financial profile on him or request a waiver for the profile (as required by Citibank policy), facilitated Mrs. Salinas' use of another name to initiate fund transfers in Mexico, and wired funds from Citibank Mexico to a Citibank New York concentration account--a business account that commingles funds from various sources--before forwarding them to the offshore investment accounts. No U.S. documentation identified Mr. Salinas as the owner of the offshore private investment company or connected Mr. Salinas to the offshore private investment company funds transferred through Citibank Mexico and Citibank New York. Limited by an ongoing Justice Department investigation, GAO could not determine whether Citibank's actions violated any laws or regulations. Citibank's actions and testimony in a 1994 money laundering trial were inconsistent concerning due diligence and know-your-customer practices in private banking. For example, Citibank's testimony implied a stricter adherence to due diligence than actually occurred during the Salinas transactions. [ABSTRACT FROM AUTHOR]