3 MEXICAN BANKS SNARED IN U.S. DRUG-MONEY STING

WASHINGTON---The United States has accused three of Mexico's largest banks
of knowingly aiding drug traffickers in laundenng hundreds of millions of
dollars in illicie proceeds from the United States and painted a grim
picture of the Mexican financial sector's complicity in the drug trade.

In an indictment, the government said the banks were charged after a
three-year sting operation in which about 200 undercover U.S. Customs
agents helped Mexican bankers launder millions of dollars through an
elaborate scheme of shuffling the money between U.S. and Mexican bank
accounts.

In addition to charging three banks with knowingly aiding drug traffickers,
the indictment alleges that officials from 12 of Mexico's 19 largest
banking institutions were involved in money-laundering activities.

Treasury Secretary Robert Rubin and Attorney General Janet Reno said that
the indictment, which was unsealed in U.S. District Court in Los Angeles,
was the culmination of "the largest, most comprehensive drug money
laundering case in the history of U.S. law enforcement."

The investigation, they said, directly linked Mexican banks and bank
officials for the first time to laundering U.S. drug profits.

The operation netted only a small fraction of the $40 billion to $60
billion in illicit drug proceeds reaped from U.S. sales each year, much of
which finds its way to traffickers:in Mexico and Colombia. But senior law
enforcement officials said the case provided the best view U.S. officials
have yet had into the increasingly sophisticated world of drug-related
money laundering.

The MeXican bankers allegedly worked on behalf of the Juarez cartel in
Mexico and the Cali cocaine and heroin syndicate in Colombia, officials
said.

U.S. authorities arrested 70 people over the weekend, including 14 Mexican
banking of ficials. About $35 million was seized and an additional $122
million is expected to be recovered from more than 100 bank accounts frozen
in the United States and Europe, of ficials said.

Most of those arrested were lured to either Las Vegas or Los Angeles by
undercover agents who offered to show them new ways to launder money
through casinos and promised them dinner and a big party, senior law
enforcement officials said.

No U.S. banks or citizens were indicted, apd U.S. of ficials said that
Mexican officials had not been informed of the operation. Ms. Reno said
that she and other senior U.S. of ficials had contacted their Mexican
counterparts Monday to tell them of the operation and that the Mexican
government had promised its "full cooperation."

Money laundering is the process whereby criminals take their illegal
proceeds and put them into the financial sector in different ways so the
money appears to have a legitimate origin. For their services, law
enforcement officials said, the banks received a cut of 4 percent to 5
percent of the money deposited.

In this case, officials said, drug traffickers would collect the drug money
off the streets in the United States, and undercover agents would then
deposit the money into accounts in Los Angeles. The money was then
transferred by wire and accumulated in Mexican bank accounts, where bankers
allegedly were aware that the money had come from drug trafficking.

Mexican bankers then issued bank drafts under fictitious names and mailed
or hand-delivered the drafts to undercover agents in Los Angeles, who
redeposited the money into the accounts. Because the money appeared as
"clean" deposits from Mexico, it could be wire-transferred or
hand-delivered to drug traffickers in Mexico.

Mr. Rubin said that the banks indicted were Bancomer, Mexico's
secondlargest bank- Banca Serfin, the country's third-largest bank; and
Confia, which is arnong the top 20 banks.

Carlos Gomez, president of the Mexican Bankers Association, said, "These
are operations from some employees and of ficials acting in an individual
way, and it doesn't represent any systematic operations of the banks
themselves."

In addition to the indictments, the Federal Reserve announced it had issued
temporary "cease and desist" orders suspending the U.S. operations of the
three banks that were indicted, as well as those of Banco Nacional de
Mexico, or Banamex, Mexico's largest bank; Bital, the country's
fourth-largest bank, and Banco Santander the fifth-largest Mexican bank.

The banks have "serious deficiencies in their anti-money laundering
programs," according to a statement by the Federeal Reserve.