The Office of the Comptroller of the Currency (OCC) lifted a 2012 consent order against Citi, Bloomberg reported Thursday, citing an internal memo at the bank.
Citi failed to perform adequate due diligence on foreign correspondent bank customers, the OCC found in 2012, noting deficiencies in the internal controls and independent testing of the bank’s anti-money laundering compliance program. Specifically, Citi could not properly identify high-risk customers or assess and monitor client relationships across the bank, and failed to timely file suspicious activity reports related to its remote deposit capture and international cash letter instrument mechanisms.
“We have worked very hard to remediate the issues identified in the OCC’s consent order by strengthening internal controls, independent testing and how we conduct due diligence,” CEO Jane Fraser said in this week’s memo, according to Bloomberg.
An OCC spokesperson declined to comment on the wire service's story.
Although the regulator’s action frees the bank from one consent order, Citi is still operating under at least two others related to internal controls. The OCC fined Citi $400 million in October 2020 over persistent issues in risk management, data governance and internal controls. The bank’s aging payment infrastructure came into question that year when an employee manually adjusted the payoff amount on a loan owed by cosmetics company Revlon, such that the bank paid the $900 million loan in full with interest years ahead of schedule with its own money rather than Revlon’s.
The Federal Reserve issued a companion cease-and-desist order in 2020, demanding that Citi “correct practices previously identified by the Board in the areas of compliance risk management, data quality management, and internal controls.”
Citi, meanwhile, hired 5,500 tech workers in 2021 and boosted its tech spend to roughly $10 billion, a 10% increase from the previous year, according to Bank Automation News.
The bank allegedly wasn't prompt, however, in its initial response to the 2012 order. The OCC fined Citi $70 million in January 2018 for failing to implement corrective actions in a timely manner.
Citi isn’t the only scandal-shadowed U.S. bank to have a consent order lifted this year. The OCC in January terminated a 2015 consent order against Wells Fargo over what it called unfair billing practices related to various third-party identity theft protection and debt cancellation products the bank sold to customers between 2004 and 2014. That terminated order predates the 2016 fake-accounts scandal responsible for most of the nine consent orders under which Wells currently operates.
Likewise, the actions for which Citi was dinged in 2012 predate the 2020 event that likely is taking up much of the bank’s corrective-action energy. But Fraser indicated the order’s termination is no less a validation of the bank’s progress.
“The lifting of the consent order gives us confidence that we can address long-standing issues in our risk and control environment as we push forward with the transformation,” she said in the memo.
