A $4.4 billion money-laundering probe linked to state-run Petroleo Brasileiro SA is spreading to financial institutions as prosecutors investigate whether they met compliance requirements.
Court documents cite units of banks including New York-based Citigroup Inc. (C), Madrid-based Banco Santander SA (SAN) and London-based HSBC Holdings Plc (HSBA), as well as Sao Paulo-basedItau Unibanco Holding SA (ITUB4) and Osasco, Brazil-based Banco Bradesco SA (BBDC4) as holding accounts or executing operations linked to the alleged laundering of 10 billion reais. Banks either declined to comment or said they meet compliance requirements.
…The $4.4 billion of alleged laundering includes cash from Brazilians seeking to evade tax authorities, revenue from drug trafficking and money allegedly embezzled from Petrobras (PETR4) contracts, according to police press releases and court documents.
Informal foreign exchange traders known as doleiros normally receive money from clients in Brazil and then make deposits abroad from seemingly unrelated accounts for a fee, allowing clients to export cash without alerting the tax authorities. In the Car Wash scheme, doleiros or their associates allegedly set up front import and export companies to move larger volumes of cash, according to court documents.