U.S. prosecutors want to know why Citigroup did not submit so-called suspicious-activity reports flagging the questionable transactions that in some cases involved suspected drug-cartel members, the newspaper said. (http://r.reuters.com/cur48v)

The Justice Department and Citigroup were not immediately available for comment outside regular business hours.

Last week Reuters reported that Federal authorities have opened a criminal investigation into a $400 million fraud involving Citigroup's Mexican unit.

Citigroup disclosed in February it had discovered at least $400 million in fraudulent loans in its Mexico subsidiary, Banco Nacional de Mexico, known as Banamex, and said employees may have been in on the crime.

(Reporting by Supriya Kurane in Bangalore; Editing by Gopakumar Warrier)