Federal
banking regulators have imposed a combined $136 million in fines on Citigroup
Inc. and its subsidiary Citibank, N.A. for ongoing deficiencies in risk
management, internal controls, and data governance.
Regulators Slap Citigroup
with $136 Million in Fines for Risk Management Failures
The Federal
Reserve Board levied a $60.6 million civil money penalty against Citigroup,
while the Office of the Comptroller of the Currency (OCC) assessed a $75
million fine. These actions stem from the banking giant’s failure to adequately
address longstanding issues identified in enforcement orders issued by both
regulators in October 2020, when the institution already paid $400 million
“Citibank
must see through its transformation and fully address in a timely manner its
longstanding deficiencies,” said Acting Comptroller of the Currency
Michael J. Hsu. “While the bank’s board and management have made
meaningful progress overall, including taking necessary steps to simplify the
bank, certain persistent weaknesses remain, in particular with regard to
data.”
Regulators fine Citigroup $136 million in setback for CEO Jane Fraser https://t.co/N2896CnvA5 via @YahooFinance
— Shanny Basar (@shannybasar) July 11, 2024
The Federal
Reserve’s penalty follows a 2023 examination that found Citigroup had made
insufficient progress in enhancing its data quality management program and
implementing appropriate compensating controls to mitigate associated risks.
These shortcomings constitute violations of the 2020 cease and desist order,
which mandated significant improvements in Citigroup’s risk management and
internal control practices.
The OCC’s
amended enforcement action requires Citi to prioritize remediation work,
including through the allocation of sufficient resources. The regulator cited
the bank’s failure to meet remediation milestones and make sufficient and
sustainable progress towards compliance with the 2020 order.
Both
regulators emphasized the need for Citigroup to accelerate its efforts to
address these longstanding issues. The penalties underscore the ongoing
challenges faced by one of the world’s largest financial institutions in
modernizing its risk management and data systems.
Jane
Fraser, the CEO of Citigroup, addressed the imposed penalties in a statement on
Wednesday, saying, “We’ve always said that progress wouldn’t be linear,
and we have no doubt that we will be successful in getting our firm where it
needs to be in terms of our transformation. We’re committed to spending what is
necessary to address our consent orders.
Citigroup
has consented to the orders without admitting or denying any allegations. The
penalties will be remitted to the US Department of the Treasury. The regulators
warned that further material failures to remediate these violations could
result in additional penalties or corrective actions under the Federal Deposit
Insurance Act.
Algo Trading Violations
These are
not the only penalties that Citigroup has received in recent months. Several
weeks ago, Germany’s financial regulator, BaFin, imposed a €12.975 million
($13.82 million) fine on Citigroup Global Markets Europe AG for breaching
obligations related to algorithmic trading under the country’s securities
trading laws.
A month
earlier, Citigroup Global Markets Limited (CGML) received a combined fine of
£61.6 million from the Financial Conduct Authority (FCA) and the Prudential
Regulation Authority (PRA). This significant penalty was due to a trading
system failure that resulted in the firm inadvertently selling $1.4 billion
worth of equities across European exchanges.
This article was written by Damian Chmiel at www.financemagnates.com.
