Instead of $280, Citigroup accidentally sent $81T to client account
What's the story
Citigroup, one of the largest global banks, made a major operational error last year and accidentally transferred $81 trillion into a customer's account. According to the Financial Times, the actual amount to be transferred was just $280. The details of this blunder have only now come to public knowledge. The error was flagged and corrected within hours, with no money leaving the bank in the meantime.
Damage control
Error was initially overlooked by two employees
The erroneous transaction was initially overlooked by two Citigroup employees but was eventually detected by a third employee, 90 minutes after it had been processed. The bank promptly reported this as a "near miss" to the Federal Reserve and Office of the Comptroller of the Currency. In an emailed response to FT, a Citigroup spokesperson confirmed their detective controls quickly identified and rectified the inputting error between two Citi ledger accounts.
Safety measures
Preventive measures and impact assessment
The bank also assured that its preventive controls would have also stopped any funds from leaving the bank. The incident did not have any impact on the bank or its client, according to a statement from Citigroup. An internal report cited by FT revealed that Citi had a total of 10 near misses involving $1 billion or more last year, down from 13 cases in the previous year.
Operational challenges
Ongoing struggle with operational issues
The series of near misses at Citi highlights the bank's continued battle to fix its operational issues. This comes nearly five years after it erroneously sent $900 million to creditors in a dispute over the debt of cosmetics group Revlon. That blunder led to hefty fines and regulatory consent orders to fix these issues, resulting in the exit of then-CEO Michael Corbat.
Regulatory commitment
CEO's commitment and recent fines
Jane Fraser, who took over from Corbat as Citi's top executive in 2021, has made resolving Citi's regulatory issues her "top priority." However, despite the commitment, the group was fined $136 million last year by the US regulator OCC and Federal Reserve for not correcting issues in risk control and data management.