Citigroup Fined $70 Million Over Shortcomings In Anti-Money Laundering Policies

The OCC – Office of the Comptroller of the Currency has fined Citigroup over failures by the bank to meet regulatory requirements with regards to anti-money laundering policies. Citigroup will now have to pay a civil penalty totaling $70 million. The regulatory action by the OCC has been viewed as a sign that the Trump administration is drawing distinctions despite having promised to loose regulations in the banking sector.

“The big question for the new administration was how they were going to categorize [anti-money-laundering] compliance… would they view it as it should be viewed, with a law enforcement and national security framework?” an expert on anti-money laundering policies and an attorney based in Washington, D.C., Ross Delston, said.

Following the regulatory action Citigroup has indicated that it will cooperate fully though the financial services firm will neither admit nor deny the wrongdoings.

Money-laundering safeguards

Six years ago there was a complaint that was made to Citigroup concerning its money-laundering safeguards. Consequently the financial services firm was ordered to make improvements but the OCC has disclosed that Citigroup failed to maintain effective controls and that its compliance efforts were inadequate.

In the complaint, the financial services firm was specifically accused of having inadequate independent testing as well as internal controls. This prevented the bank from being able to conduct adequate due diligence and checks on its customers in both retail and correspondent banking. Consequently this resulted in the bank not being able to file reports whenever there were suspicious activities. At the time Citigroup was ordered to fix the problems and was spared a fine.

Settlement agreement

Last year in May the U.S. Justice Department and Citigroup reached a settlement with regards to a criminal investigation that was being carried out on the latter’s Banamex USA division over violation of anti-money laundering policies as well as the BSA – Bank Secrecy Act. Under the settlement agreement, Citigroup would pay a penalty of $97 million to avoid prosecution.

Three years ago Citigroup was fined $140 million by regulators after loopholes were identified in its anti-money laundering policies. Citigroup is however not alone among the large financial institutions with regards to violations of anti-money laundering policies. Last year Deutsche Bank AG was fined a total of $425 million following accusations that it was involved in a plot to launder approximately $10 billion from Russia. Six years ago HSBC Holdings was slapped with a $1.9 billion fine over similar violations.

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