NEW YORK–Citigroup has agreed to pay a $400-million fine over long-running problems related to keeping its daily operations under control. The announcement comes just two months after one of its employees sent nearly $1 billion to the wrong recipients.
According to the Federal Reserve and the Office of the Comptroller of the Currency, which assessed the fine, Citi has been engaging in “unsafe and unsound banking practices,” including in its programs to catch money launderers.
In a joint statement, the regulators said Citi had failed to fix problems that had been identified over a period of years, with the O.C.C. calling the bank’s deficiencies a “longstanding failure to establish effective risk management.”
The New York Times noted Citibank is in the midst of a major transition — its chief executive, Michael Corbat, will step down early next year and be replaced by Jane Fraser, Citigroup’s president–and must now make improvements to satisfy both regulators. Among the necessary steps: making its executives’ roles clearer and creating a stronger link between their pay and their effective stewardship of the bank.
“We are disappointed that we have fallen short of our regulators’ expectations, and we are fully committed to thoroughly addressing the issues identified,” the bank said in a statement.
Other Allegations
In addition to the $1 billion wire error, the OCC said Citi has also violated the Fair Housing Act in 2019 and the Flood Disaster Protection Act earlier this year, and attributed both to Citi’s inadequate risk management procedures.
The bank has also had trouble keeping track of the flow of illicit funds through its accounts.