MEXICAN BANKS TO PLEAD GUILTY TO LAUNDERING DRUG MONEY

LOS ANGELES - With their trial just days away, two of Mexico's biggest
banks have agreed to plead guilty to laundering millions of dollars
for the Cali and Juarez drug cartels, sources close to the case said.

Bancomer will pay $9.9 million in fines while Banca Serfin will pay
$4.7 million as part of their separate deals with federal prosecutors
in Los Angeles.

In a related development, the government has agreed to drop all
criminal charges against a third Mexican financial institution, Banca
Confia, in a civil settlement of the money-laundering case.

Confia, which sold most of its assets to Citibank after it was
indicted, has agreed not to fight the U.S. government's earlier
seizure of $12.1 million from its U.S. holdings.

A hearing was scheduled for today before U.S. District Judge Lourdes
Baird to enter the guilty pleas.

All three banks were indicted last May with more than 100 people,
mostly Mexicans, in Operation Casablanca, the Customs Service's 2
1/2-year probe of international drug money laundering.

Twenty-two bankers from a dozen Mexican and two Venezuelan financial
institutions were implicated.

When it became public, Mexican officials complained of being kept in
the dark about the cross-border operation. Customs agents said they
deliberately withheld information because they feared a leak by
corrupt Mexican law officers.

In addition to fines arising from their criminal pleas, Bancomer and
Banca Serfin face hearings before the Federal Reserve Board to decide
whether they should be barred from operating in the United States.

Under a 1992 law, any foreign bank convicted of money laundering is
subject to a mandatory license-revocation hearing before the Fed.

Bancomer, with close to $30 billion in assets, is the second-largest
bank in Mexico. It maintains offices in Los Angeles and New York and
is a partner with the U.S. Postal Service in Dinero Seguro, a program
that enables people in the United States to transfer money
electronically to Mexico.

Banca Serfin is the third-largest Mexican bank with $16.7 billion in
assets and has offices in New York.

After the indictments were issued, federal authorities instituted
forfeiture actions against the U.S. assets of all 14 Mexican and
Venezuelan banks whose employees were accused of participating in the
money-laundering network.

More than $68 million was confiscated, including $16 million from
Bancomer, $12.1 million from Banca Confia and $9.5 million from Banca
Serfin.

Despite the plea agreements with the banks, the trial is expected to
start Thursday against six Mexican bankers and businessmen, the
remaining defendants in this case.

Eleven defendants have entered guilty pleas while 20 more are
fugitives.

Three separate trials are in the works later this year for suspected
members of the Cali cartel, the Juarez cartel and four Venezuelans
accused of money laundering.