This blunder happened last April and slipped past two officials who were supposed to double-check the transaction before it went through. It was only flagged by a third employee who noticed something was off with the bank's account balances over an hour later.
Fortunately, no money actually left Citigroup. The bank informed the Federal Reserve and the Office of the Comptroller of the Currency that it was a “near miss,” which means they processed the wrong amount but managed to recover the funds. The Times reported that there were a total of 10 similar incidents at Citigroup last year, based on an internal report.
In a statement, Citigroup clarified that a transaction of that size “could not actually have been executed,” emphasizing that their detection systems caught the error and reversed the transaction. They added that this incident highlights their ongoing efforts to reduce manual processes and enhance automation in their operations.
Citigroup has been working hard to prevent such errors after facing reputational and financial setbacks from previous mistakes.
Last year, British regulators slapped Citigroup with a $79 million fine due to a May 2022 incident where one of its traders accidentally sold $1.4 billion worth of stocks on European exchanges, causing a “flash crash.” The trader intended to sell just $58 million but mistakenly placed an order for $444 billion, most of which was blocked before it could be sold.
In 2020, Citigroup also goofed up by using its own funds to pay off an $894 million loan for Revlon, a cosmetics brand. While some of the money was returned by lenders, 10 of them refused to give back the cash.
Citigroup and ten other companies came to an agreement in late 2022 after Revlon went for Chapter 11 bankruptcy protection. Back in September 2020, then-CEO Michael Corbat announced he would step down earlier than planned, with sources indicating that regulators were unhappy with the bank's failure to resolve risk and compliance problems.
Jane Fraser, who took over as CEO, has committed to fixing these issues. Since late 2023, Citigroup has been undergoing a significant reorganization and pouring resources into data and technology upgrades.
Fraser mentioned to analysts last year, “We have fragmented tech platforms, manual processes, and a weak first line of defense, along with too few experts in key areas. This is a huge undertaking that goes far beyond just the consent order; it’s not just old Citi slapping on quick fixes. We’re addressing the core problems directly.”
In June, the Federal Deposit Insurance Commission and the Federal Reserve Board pointed out ongoing weaknesses in data reliability and the bank's compensating controls. Then in July, Citigroup faced a $136 million fine for not making enough progress in improving its data management.