MEXICO CITY, Oct 16 (Reuters) - Mexico’s banking regulator on Thursday said it was investigating a security services unit at Citigroup’s troubled Mexican unit Banamex, after the bank revealed a $15 million fraud at the subsidiary earlier this week.
The fraud, revealed by Citigroup on Tuesday, was related to expense claims submitted to the bank by the security unit, according to a person familiar with the matter. The unit was originally set up to protect Banamex board members and their families from kidnappers and other attackers.
Jaime Gonzalez, President of Mexico’s banking regulator, the Comision Nacional Bancaria y de Valores, said the agency was investigating the unit for possible administrative violations and had asked for more information from the bank.
The Attorney General’s office would be responsible for a possible criminal probe, the government said.
Javier Laynez, the fiscal prosecutor in the finance ministry, said the bank had on Oct. 2 informed authorities of the possible irregularities, who had passed on the information to the public prosecutor’s office on Oct. 6 and 7.
Citigroup has said it notified and was cooperating with U.S. and Mexican law enforcement and regulators about the issue.
Mexico’s bank regulator said on Wednesday it had fined Banamex nearly 30 million pesos (US$2.2 million) over lapses in oversight of loans to oil services company Oceanografia that cost the lender more than $500 million. (Reporting by Alexandra Alper; Editing by Meredith Mazzilli)