Citicorp attacked in laundering case

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The Independent Online
THE LONDON arm of Citicorp, the US bank, has come under criticism in a hard-hitting US report about an international trail of alleged drug money involving Mexico, Switzerland and the offshore banking centre of the Cayman Islands.

The report, released on Friday by the General Accounting Office of the US Congress, is entitled "Raul Salinas, Citibank, and Alleged Money Laundering". It chronicles Citicorp's role in transferring between $90m (pounds 54m) and $100m in suspected drug and other dirty money out of Mexico through a complex international network for Raul Salinas, the imprisoned brother of Mexico's ex-president, Carlos Salinas de Gortari.

A bank account held in the name of a Cayman Islands shell company called Trocca at Citibank's office in the Strand was one of the two main ultimate destinations of the Salinas funds. Some $23.4m has been frozen in UK bank accounts since December 1995, when British police launched an investigation.

The report suggests that Citibank London may have blindly accepted the Trocca accounts. British and European Law dictate that banks know their customers.

John Moscow, a senior US government prosecutor in New York, says this means that each country's bank unit should know with whom it is dealing. "For multinational service companies to open an account in one country and assert they know their customer when opening accounts in other countries while concealing the real identity of the customer is to make a mockery of know-your-customer rules."

The report states that at first, Citibank officials told its investigators that "Citibank London had no documentation or knowledge that Mr Salinas was Trocca's beneficial owner". The report continues, "However, these officials subsequently contradicted themselves by stating that an assistant to Citibank's London Private Banking Officer did have information concerning Salinas."

The US report supports Swiss prosecutors' seizure on 20 October of most of the Salinas frozen funds.It casts doubts on Salinas' contention that his money in Switzerland was part of an investment fund that his friends had asked him to manage. The Swiss have requested that Britain seize and forfeit to Switzerland the $23.5m held in the UK. The Home Office confirms the Swiss request, but will not comment further.

The new US report is likely to spur British and American investigations into Salinas and Citibank.