Citigroup has encountered a significant operational issue, as it was reported that the bank erroneously credited $81 trillion to a customer’s account last April, a glaring mistake that went unnoticed for hours. The error, which occurred during a routine transaction, highlights ongoing operational challenges within the bank, despite its previous efforts to address such concerns.
According to reports from the Financial Times, a payments employee failed to catch the error, and a second official assigned to review the transaction also missed it. The mistake, which was far larger than the intended $280, went undetected until a third employee identified the issue one-and-a-half hours after the payment had been processed. The bank managed to reverse the transaction several hours later, preventing any funds from being transferred, although the episode raised serious concerns about the robustness of Citi’s internal controls.
Citigroup promptly informed the Federal Reserve and the Office of the Comptroller of the Currency (OCC) about the incident, which is classified as a “near miss.” A “near miss” refers to situations where incorrect transactions are detected and reversed before they result in financial loss. Citi reassured the public, stating that its internal “detective controls” had flagged the error, and confirmed that neither the bank nor its client was impacted by the mistake.
This incident is part of a troubling pattern of operational missteps for Citi, with the bank reportedly experiencing 10 “near misses” of $1 billion or more last year, a slight improvement from 13 in the previous year. These incidents are part of a broader trend of operational inefficiencies that have raised alarms among both regulators and investors.
Citi has been under scrutiny for its risk management and compliance practices in recent years. Last month, Citi’s CFO Mark Mason acknowledged that the bank had ramped up investments to address its compliance issues, particularly in data governance and regulatory reporting. This is in response to regulatory fines, such as a $136 million penalty last year for insufficient progress in improving compliance and risk management. The bank had previously been fined $400 million in 2020 for similar issues.
These repeated errors and regulatory fines underscore the ongoing challenges that Citigroup faces in its efforts to modernise and improve its operations. Despite efforts to bolster compliance and technology infrastructure, incidents like this underscore the work still required to fully address these issues.
As Citigroup continues its efforts to remedy these operational and regulatory shortcomings, stakeholders will be watching closely to see whether these challenges are fully resolved in the coming months.
