Federal Regulators Impose $135.6 Million in Fines on Citigroup for Ongoing Compliance Issues

The Federal Reserve Board and the Office of the Comptroller of the Currency (OCC) have levied combined fines of $135.6 million against Citigroup and its subsidiary Citibank for persistent deficiencies in risk management and internal controls.

On July 10, 2024, the Federal Reserve Board announced a $60,625,620 civil money penalty against Citigroup for violating a 2020 enforcement action. Concurrently, the OCC imposed a $75 million penalty on Citibank, bringing the total fines to approximately $135.6 million.

The Federal Reserve's action stems from an examination conducted by the Federal Reserve Bank of New York in 2023, which found that Citigroup had "ongoing deficiencies in data quality management and ineffective compensating controls to mitigate associated risks." The examination also revealed that Citigroup's progress in enhancing its data quality management program, as required by the 2020 order, was inadequate.

According to the Fed's order, Citigroup violated the 2020 cease and desist order through "delays in completing milestones included in its approved plan to enhance its data quality management program and through inadequate measures for managing and controlling its data quality risks until the plan is implemented in full."

The 2020 order addressed significant ongoing deficiencies in various areas of risk management and internal controls, including data quality management, regulatory reporting, compliance risk management, capital planning, and liquidity risk management.

The OCC's action similarly cited Citibank's failure to meet remediation milestones and make sufficient progress towards compliance with its 2020 order. Acting Comptroller of the Currency Michael J. Hsu emphasized that while Citibank has made progress in some areas, "certain persistent weaknesses remain, in particular with regard to data."

Both regulatory bodies stressed the importance of Citigroup and Citibank prioritizing their remediation efforts and allocating adequate resources to address these longstanding issues.

The Federal Reserve's order also warns that "material failure to remediate the violations described herein may require additional and escalated formal actions," including the possibility of additional penalties or corrective actions.

These coordinated actions by two major financial regulators underscore the seriousness of the ongoing compliance and risk management issues at one of the largest financial institutions in the United States. They also highlight the regulators' determination to see meaningful improvements in Citigroup's operations and compliance frameworks.

Citigroup and Citibank have consented to these orders without admitting or denying the regulators' findings. The financial penalties will be paid to the U.S. Treasury.

This development serves as a stark reminder of the importance of robust risk management and compliance systems in the banking sector, especially for institutions designated as systemically important to the financial system.

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