U.S. INVESTIGATING MEXICO DRUG STING, RUBIN SAYS

KANANASKIS, Alberta (Reuters) - The U.S. Treasury Department is
investigating whether the United States broke Mexican laws in a probe of
and sting against alleged drug-money launderers, Secretary Robert Rubin
said Saturday.

The three-year operation implicated 12 Mexican banks.

``There's been concerns expressed, and we're looking at it,'' he told
reporters on the sidelines of a meeting of finance ministers from the
Asia-Pacific region in this resort in the Canadian Rockies. ``We'll have a
better idea next week.''

Rubin spoke after a closed-door meeting with his Mexican counterpart, Jose
Angel Gurria, earlier Saturday.

``They agreed that the indictments of Mexican bank employees and officials
were not a reflection on the safety and soundness of Mexico's banking
system,'' a Treasury spokesman said later.

``Secretary Rubin and Secretary Gurria reaffirmed their strong commitment
to continuing their cooperation against money laundering,'' he added.

Mexico formally protested to the United States last week over its handling
of the operation, alleging that U.S. undercover agents had crossed into
Mexico. Washington said the probe had been limited to U.S. soil.

Rubin defended the fact that only a very small circle of people had been
informed about ``Operation Casablanca.'' ``In these undercover operations,
you have people whose lives are literally at stake,'' he said.

The Mexican Foreign Ministry last week ordered the country's embassy in
Washington to send a formal protest to the U.S. government and to express
Mexico's ``deep concern and surprise'' over the investigation and sting --
unusually strong words for a diplomatic exchange.

The discord came after U.S. officials announced they had arrested more than
100 people and indicted 26 officials at 12 Mexican banks for allegedly
laundering drug money for Mexican and Colombian cartels.

On Wednesday, the U.S. Treasury Department said the investigation had also
implicated four Venezuelan banks. The next day Colombian authorities said
they had frozen bank accounts holding about $590,000 as a result of the
operation.

Checked-by: Mike Gogulski