Citigroup's 2013 AML Enforcement Action Terminated by Federal Reserve
The Federal Reserve has terminated a decade-long enforcement action against Citigroup Inc. C, which was filed over weaknesses in the bank's anti-money laundering (AML) practices.
Background of Citigroup’s Enforcement Action
In March 2023, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency raised concerns over insufficient controls and risk management practices pertaining to the Bank Secrecy Act (BSA) and AML requirements.
The enforcement action didn’t include any fine and was filed against Citigroup and its subsidiaries, Banamex and Citibank N.A., in response to concerns about its compliance with AML regulations.
Citigroup’s Measures on the Enforcement Action
In 2013, the Fed acknowledged that Citigroup had adopted a firm-wide compliance risk management program, which was directed at identifying and managing risks related to laws, rules, or regulations.
In terms of the procedures, the board of directors of Citigroup agreed to submit a written plan to the Fed regarding the ongoing improvements that the board implemented within its oversight of the bank's compliance risk management program, particularly in relation to BSA and AML requirements. The plan would outline details of funding for personnel, systems and other necessary resources, along with details on how the policies would take a proactive approach.
Citigroup agreed to implement improvements that would address BSA/AML-related audit compliance issues. Additionally, Citigroup agreed to conduct a review of the firmwide BSA/AML compliance program and submit to the Fed a report that included findings, recommendations and improvements, such as transaction monitoring and suspicious activity reporting.
Apart from this, Citigroup has gone through significant transformations since the action was originally enforced. In May 2023, the company revealed plans to pursue an initial public offering (IPO) for Banamex, after deciding to exit the consumer banking, small business and middle-market banking operations in Mexico. It remains on track to separate its business in Mexico by the second half of 2024, followed by an IPO in 2025.
Citigroup’s Zacks Rank & Price Performance
Year to date, shares of Citigroup have gained 20.2% compared with the industry’s growth of 20%.
Image Source: Zacks Investment Research
Currently, C carries a Zacks Rank #3 (Hold).
Stocks Worth a Look
Some better-ranked stocks from the banking space are The Bank of New York Mellon Corporation BK and UMB Financial Corporation UMBF.
Estimates for BK’s current-year earnings have increased marginally in the past seven days. The company’s shares have gained 23.4% over the past six months. Currently, BK carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Estimates for UMBF’s current-year earnings have remained unchanged in the past seven days. The company’s shares have jumped 21.5% over the past six months. At present, UMBF also carries a Zacks Rank #2.
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Citigroup Inc. (C) : Free Stock Analysis Report
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UMB Financial Corporation (UMBF) : Free Stock Analysis Report