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Citi Fails Money-Laundering Compliance Needs, To Pay $70M

Zacks Equity Research

On Thursday, banking giant, Citigroup Inc. C, was fined by the U.S. regulator, the Office of the Comptroller of the Currency (OCC), on failure of meeting the regulatory requirements related to its anti-money laundering policies. Notably, the bank has agreed to pay $70 million as civil penalty.

In 2012, Citigroup faced a complaint related to its money-laundering safeguards and was thereby ordered to improve the shortcomings. However, the OCC revealed that the bank has faulted on its compliance efforts and failed in maintaining effective controls.

The bank extended full co-operation to the regulators without admitting or denying the wrongdoings and agreed for the charges.

“Citi is committed to taking all necessary and appropriate steps to remedy the concerns identified by the OCC,” Rob Runyan, a Citigroup spokesman, said in a statement. The bank has made “substantial investments” to improve its money-laundering protections, he added.

Previously, in May 2017, Citigroup and the U.S. Department of Justice (DOJ) had entered into a settlement agreement related to the criminal investigation at the bank's Banamex USA (BUSA) unit. The unit was probed for violating anti-money laundering (AML) rules and the Bank Secrecy Act (BSA). The settlement agreement was non-prosecution and included an amount of $97 million to be paid by Citigroup.

In 2015 also, the bank paid $140 million as settlement to regulators over loopholes in its AML program. The penalty amount imposed by the Federal Deposit Insurance Corp. included $40 million to be paid to California's Department of Business Oversight as civil penalties.

Similar Issues with Other Banks

Earlier in 2017, Deutsche Bank AG DB also paid a $425 million fine as it was accused for involvement in a plan which illegally laundered $10 billion out of Russia.

Notably, in 2012, HSBC Holdings plc HSBC was blamed for substantial lapses in its anti-money laundering compliance and was fined $1.9 billion for misdeeds.


Banks across the globe have been facing heightened scrutiny for their business practices. Many of the firms have paid billions of dollars as fines and compensation to settle lawsuits and probes. Many investors have lost their hard-earned money as a result of such business malpractices. Such settlements help restore their confidence in law-enforcement agencies. Moreover, it reduces the existing litigation burden of banks.

Currently, Citigroup carries a Zacks Rank #3 (Hold). Shares of Citigroup have gained 11.7% in the last six months compared with 12.1% growth recorded by the industry.

A better-ranked bank — SunTrust Banks, Inc. STI — has been witnessing upward estimate revisions for the last 30 days. Additionally, the stock jumped more than 14% over the past six months. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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