LV banks review money-wiring deals to Mexico

SUN STAFF AND WIRE REPORTS

Culminating a three-year undercover sting operation described as the largest drug money-laundering case in American history, a federal grand jury in Los Angeles on Monday charged three Mexican banks and 26 Mexican bankers with laundering millions of dollars in drug profits.

The indictments were announced by Treasury Secretary Robert Rubin and Attorney General Janet Reno, who said the charges marked the first time Mexican banks and bank officials were directly linked to laundering U.S. drug proceeds for the Cali cartel of Colombia and the Juarez cartel of Mexico.

The three Mexican banks charged are Bancomer and Banca Serfin, Mexico's second and third-largest banks, respectively, as well as Banca Confia, a smaller institution recently purchased by Citibank. Both Bancomer and Banca Serfin have branches in New York and Los Angeles and could face sanctions by U.S. regulators.

The undercover operation, disclosed in indictments unsealed Monday in U.S. District Court in Los Angeles, was led by the Customs Service and known as "Operation Casablanca."

"By infiltrating the highest levels of ... international drug trafficking ..., Customs was able to crack the elaborate financial schemes the drug traffickers developed to launder the tremendous volumes of cash acquired as proceeds from their deadly trade," Rubin said.

U.S. Bank, which has branches in Southern Nevada, has a money-transfer agreement for customers with Banca Serfin. It has been promoted as a safe and secure way for Mexicans working in Las Vegas to wire money home to Mexico. How the indictments would affect that relationship hasn't been determined, a bank official said on Monday.

However, a cursory analysis of customer transfers performed by the bank recently did not disclose the presence of any money-laundering patterns, the official said.

U.S. Bank's international banking division and currency exchange officials were reviewing the matter on Monday.

Separately, the Federal Reserve said issued "cease and desist" orders naming five foreign banks -- Banca Serfin, Bancomer, Banamex and Bital of Mexico and Banco Santander of Spain. Each operates offices in the United States.

The order requires the banks to implement new anti-money laundering procedures.

A spokeswoman for Wells Fargo Bank, another bank with Las Vegas branches, said the action taken by the Federal Reserve would not affect the company's InterCuenta Express funds transfer system in place with Banco Nacional de Mexico (Banamex).

Rebecca Eyre, vice president of remittance with Wells Fargo, said by design the InterCuenta Express program would not be an effective money-laundering front since the maximum amount that can be transferred is $1,000 per day.

"People who deal in that so-called business are involved with amounts that have several more zeroes behind the one," Eyre said. "A thousand dollars would be considered chump change to a money launderer."

Dubbed "Operation Casablanca," the investigation led by the U.S. Customs Service resulted in the arrests of 22 bankers from 12 of Mexico's 19 largest banking institutions after they traveled to the United States last weekend.

Arrest warrants for others were issued on Monday. In addition, the authorities said that over the three-year investigation that they had seized $35 million in illegal proceeds from drug money, two tons of cocaine, and four tons of marijuana.

The Mexican bankers who were arrested on Saturday had planned on a much more celebratory weekend. Undercover agents had used several ruses to lure them to this country. Some had arrived in San Diego, where they had thought that they would be attending a banking conference on money laundering. Others, with whom undercover agents had participated in money laundering activity, were told to come to a purported casino opening in Mesquite, Nev., where, they were told, their drug cash would be welcomed.

In a hastily called press conference in Mexico City, representatives of the Mexican Bankers Association pledged full cooperation with U.S. authorities and their Mexican counterparts.

"I applaud the actions," said Carlos Gomez y Gomez, president of the bankers group. "We should not permit narco-trafficking and money-laundering to destroy our society.

"From what we know, all the presidents and directors in the Mexican banks were totally surprised by this," Gomez y Gomez added. "This appears to be the actions of individuals who defrauded their banks and defrauded their country. But it's clear that the (internal bank) controls that we had in the past were not good enough (to prevent laundering)."

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