Petrobas, HSBC, Citigroup, Santander, Itau, Banco Bradesco under investigation for money laundering in Brazil

A major corruption investigation involving the finances of Brazil's state-owned oil company Petrobas has engulfed a number of the country's largest financial institutions in addition to some major international banks.

Bloomberg reports the investigation revolves around compliance with financial regulations regarding sums of money totaling $4.4 billion.

Among the financial institutions implicated in court documents are New York City-based Citigroup, Madrid-based Santander, London-based HSBC, Sao Paulo-based Itau Unibanco, and another Brazilian bank, Osasco-based Banco Bradesco.

The case, nicknamed "Car Wash" is currently before a judge and being worked on by six different prosecutors in Brazil.

Petrobas is already under investigation for wrongdoing in its refinery division. That investigation focuses on paying unnecessarily high prices for contracts to suppliers. It is thought that those funds are among the $4.4 billion that is being investigated for laundering.

When news of the new investigation broke, Petrobas' stock fell 2.3 percent.

The prosecutors allege that the banks and various brokerages either created accounts or moved money around for various front companies that had no other purpose than to create a fake paper trail to hide financial misdeeds.

The prosecutors also claim that the banks have been stonewalling their investigation by refusing to hand over the necessary data in a timely fashion. The judge in the case has lifted various banking privacy laws as they relate to the case to help along the investigation.

In addition to overly expensive oil contracts, the $4.4 billion is also said to consist of drug trafficking revenue. The money laundering also appears to have been done in an effort to avoid paying various taxes.

The banks under investigation are among the ten largest private banks in Brazil. The banks' combined net worth constitutes 38 percent of all of the financial assets in Brazil.

The banks have denied any wrongdoing.