Citi mistakenly credited a customer account with an astronomical $81 trillion in April last year due to an error by a payments employee. This significant mistake occurred when the employee intended to credit only $280. Another official failed to verify the transaction, allowing the error to go unnoticed initially. The situation came to light one-and-a-half hours later when a third employee reviewed the transaction. Citi reversed the error several hours after it was identified.
The bank promptly disclosed the incident to the Federal Reserve and the Office of the Comptroller of the Currency (OCC), emphasizing that neither the bank nor the client suffered any adverse impact. Citi's "detective controls" effectively detected the discrepancy between two ledger accounts, allowing for a swift reversal and recovery of the misallocated funds.
Despite the rapid correction, this incident underscores ongoing operational challenges at Citi. Last year alone, there were 10 near misses involving sums of $1 billion or more, a slight improvement from 13 such instances in the previous year. In July, regulators fined Citi $136 million for failing to make sufficient progress in resolving compliance issues, following a $400 million fine in 2020 for risk and data management shortcomings.
Citi's Chief Financial Officer, Mark Mason, acknowledged these challenges and emphasized the bank's commitment to addressing them through increased investment.
“We saw the need to invest more in the transformation on data, on technology, on improving the quality of the information coming out of our regulatory reporting” – Mark Mason
The bank has been actively working to rectify its operational issues and enhance its compliance framework. Despite these efforts, this incident highlights persistent vulnerabilities in Citi's operations. Strengthening compliance and operational controls remains a priority for the financial institution as it seeks to restore confidence among regulators and clients alike.