Key Insights
- Citigroup and Citibank fined $136 million by U.S. regulators for ongoing risk management and data governance issues.
- Penalties follow 2020 enforcement orders and highlight insufficient progress in addressing longstanding problems.
- Recent fines come amid other penalties in Germany and UK for algorithmic trading breaches and a trading system failure.
NEW YORK (MarketsXplora) – U.S. 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, underscoring the banking giant’s struggle to address longstanding issues.
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 follow enforcement orders issued in October 2020, when the institution already paid $400 million for similar failings.
Regulators fine Citigroup $136 million in setback for CEO Jane Fraser https://t.co/N2896CnvA5 via @YahooFinance
— Shanny Basar (@shannybasar) July 11, 2024
Acting Comptroller of the Currency Michael J. Hsu emphasized the need for Citibank to complete its transformation, stating,
“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.”
The Federal Reserve’s penalty stems from 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.
The OCC’s amended enforcement action requires Citi to prioritize remediation work, including through the allocation of sufficient resources. Both regulators stressed the need for Citigroup to accelerate its efforts to address these issues.
Citigroup CEO Jane Fraser addressed the penalties, 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.”
The bank has consented to the orders without admitting or denying any allegations. Regulators warned that further material failures could result in additional penalties or corrective actions.
These fines come on the heels of other recent penalties for Citigroup. Germany’s financial regulator, BaFin, imposed a €12.975 million fine for breaches related to algorithmic trading. Additionally, Citigroup Global Markets Limited received a £61.6 million fine from UK regulators for a trading system failure that led to the inadvertent sale of $1.4 billion worth of equities.
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