CORRECTED-UPDATE 3-U.S., Mexico probe Citi over money laundering law compliance

weeks.
Gonzalez said he hoped to have conclusions from the investigation in two to three
Citigroup disclosed on Friday that it had discovered at least $400 million in
fraudulent loans in its Banamex subsidiary in Mexico and said employees might have been
involved in the apparent crime.
Law enforcers from the Mexican Attorney General's office and from the U.S. Federal
Bureau of I nvestigation and Securities and Exchange C ommission are investigating the
transactions, people familiar with the probes have said.
Banamex made the loans to Mexican oil services company Oceanografia on the basis
of payments due for services provided to Mexican state -owned oil company Pemex.
But Citigroup said it cou ld not validate that Pemex owed $400 million to
Oceanografia, or more than two -thirds of the invoices it had used as collateral for its loans.
In the third quarter of 2013 problems with about $300 million of loans that
Ba namex had made to three Mexican homebuilders prom pted Citigroup to book reserves
for expected losses.
Citigroup Chief Executive Michael Corbat called the incident a "desp icable crime"
when it wa s first disclosed and said then the bank believes it was an isol ated episode. He
also said that criminal actions by Mexican autho rities might allow Citigroup to recover
dama ges.
Citigroup is the third -largest U.S. bank by assets. The company views its
internat ional business as a competitive advantage over other big banks in the United
States.
(Reporting by David Henry and Jonathan Stempel in New York, Christine Murray in Mexico
City and Aruna Viswanatha in Washington; Editing by Lisa Von Ahn and Sofina Mirza-Reid)