Fed lifts 2013 Citi enforcement action
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Dive Brief:
The Federal Reserve terminated a 2013 enforcement action against Citi, related to anti-money laundering and Bank Secrecy Act deficiencies, the central bank said Tuesday.
Citi “lacked effective systems of governance and internal controls” to adequately oversee the activities of Citibank and Citigroup subsidiary Banamex USA, concerning risks related to BSA/AML compliance programs, according to the consent order.
Citi declined to comment. The Fed terminated the consent order Sept. 26.
Dive Insight:
Citi was tasked with stepping up board oversight of the company’s risk management program as it related to AML and BSA, and drafting a plan to enhance the governance, structure and operations of its compliance program regarding AML/BSA requirements and Office of Foreign Assets Control regulations.
The New York-based bank was also ordered to review and issue a report on findings and recommendations surrounding the bank’s AML/BSA compliance program, and outline specific actions it planned to take to strengthen management and oversight of its program.
Citi wound down Century City, California-based Banamex USA in 2015 and paid $140 million in fines after the subsidiary became the target of California and federal money-laundering probes. Separately, Citi plans to pursue an initial public offering in 2025 for Banamex, its Mexican banking unit.
The Fed’s decision comes nearly a year after the regulator lifted a 2015 enforcement action against the bank that dealt with the lender’s role in a foreign currency exchange gaming scheme. In 2022, the Office of the Comptroller of the Currency terminated a 2012 consent order against Citi, related to AML and BSA compliance.
Citi, of course, isn’t out of the regulatory woods yet. The bank still operates under 2020 enforcement actions from the Fed and the OCC, which ordered the bank to address issues with its data quality, risk management and internal controls. Citi was hit with $135.6 million in new penalties in July, tied to those 2020 orders, with regulators citing insufficient progress on those efforts thus far.
Amid a major reorganization and technology overhaul, the bank is working to “swiftly” incorporate regulator input as it aims to put its data, risk and control issues behind it, CFO Mark Mason said last month. Citi executives are committed to investing whatever’s necessary to resolve consent orders and strengthen controls, although “there will always be fits and starts when you do an overhaul of this size and magnitude,” Mason said.