Citigroup Faces $60.6 Million Fine from Federal Reserve for Risk Management Shortcomings

The U.S. Federal Reserve has imposed a $60.6 million fine on Citigroup for continued failures in its risk management and data quality practices.

The U.S. Federal Reserve has penalized Citigroup with a hefty $60.6 million fine for persistent shortcomings in its risk management and data quality practices. This enforcement action follows Citigroup's lackluster efforts in addressing deficiencies identified by a 2020 order.

According to the recent examination by the Federal Reserve, Citigroup's measures to enhance its data quality management and regulatory reporting were deemed insufficient. Despite submitting a plan to address these issues, the bank failed to implement effective compensating controls, resulting in ongoing deficiencies in compliance and risk management.

This latest penalty is a consequence of Citigroup's failure to meet the milestones and measures outlined in the 2020 Order to Cease and Desist. The order highlighted significant weaknesses in various areas, including data governance, compliance risk management, capital planning, and liquidity risk management. The recent examination by the Federal Reserve Bank of New York confirmed that these issues persist, prompting the new penalty.

"The Board's action is being taken in coordination with the Office of the Comptroller of the Currency. The penalties announced by the Board and the Office of the Comptroller of the Currency total approximately $135.6 million," the Fed stated on Wednesday.

Citigroup has consented to the fine and is reportedly taking steps to rectify the cited violations. However, the Federal Reserve indicated that further enforcement actions could be pursued if Citigroup fails to achieve substantial compliance with its risk management and data quality obligations. The Federal Reserve emphasized the importance of Citigroup operating in a safe and sound manner.

The news comes after federal regulators, including the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC), issued warnings to four major banks regarding their living wills. Citigroup was one of the banks scrutinized in the investigation. The financial penalty will be remitted to the U.S. Department of the Treasury, as stipulated by the Federal Deposit Insurance Act.

What are your thoughts on the Fed fining Citi over risk management deficiencies? Share your thoughts and opinions about this subject in the comments section below.

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