Citigroup accidentally credited a client’s account with a staggering $81 trillion last April, a blunder that could hamper the bank’s efforts to convince regulators it has addressed longstanding operational deficiencies.
The Financial Times reports that in an incident that went unreported until now, Citigroup mistakenly entered an internal transfer of $81 trillion to a client account, when the intended amount was just $280. The erroneous transaction, which took place in April 2022, managed to slip through the bank’s initial checks and balances.
According to an internal account of the event seen by the Financial Times, as well as two people familiar with the matter, the $81 trillion error was missed by both the payments employee responsible for the transaction and a second official tasked with verifying it before being approved for processing the following business day.
It wasn’t until 90 minutes after the payment posted that a third employee caught the discrepancy while reviewing the bank’s account balances. The payment was then reversed several hours later. While no client funds actually left Citigroup, the bank did disclose the “near miss” to the Federal Reserve and the Office of the Comptroller of the Currency.
This episode underscores the ongoing challenges Citigroup faces in its efforts to overhaul risk management processes and eliminate manual procedures. The bank has been under regulatory scrutiny since mistakenly wiring $900 million to Revlon creditors in 2020, an error that led to the departure of then-CEO Michael Corbat and hefty fines.
Under current CEO Jane Fraser, who took the helm in 2021, Citigroup has made fixing regulatory issues a top priority. However, setbacks persist, as evidenced by the $136 million in fines imposed last year by the OCC and Federal Reserve for the bank’s failure to rectify risk control and data management problems.
Internal reports reveal that Citigroup experienced a total of 10 “near misses” of $1 billion or more in 2022, a slight improvement from 13 such incidents the previous year. While near misses do not require reporting to regulators, making comprehensive industry data unavailable, multiple former regulators and bank risk managers indicated that billion-dollar close calls are uncommon in the US banking sector.
The $81 trillion near miss in April stemmed from an input error and an unwieldy backup system interface. When a payment of $280 got flagged as a potential sanctions violation in March, it remained stuck in the bank’s system even after being cleared. To complete the transaction, a payments employee was instructed to manually input it into a seldom-used backup screen, which contained a quirk: the amount field was pre-filled with 15 zeros that needed manual deletion, a step that was overlooked.
Read more at the Financial Times here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
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