Enforcement Against Citigroup Tough But “Could Have Been Worse”

The Federal Reserve and the Office of the Comptroller of the Currency announced enforcement actions and a $400 million fine against Citigroup Inc. on Oct. 7. The actions were taken for lax risk management and internal control problems. An analyst for Capital Alpha called the penalties fairly tough, but said they could have been a lot worse. Although the board must submit a compliance plan within 120 days along with quarterly progress reports, the actions were not as severe as those taken against Wells Fargo & Co, which included an asset cap that is squeezing revenues. The fine is also far lower than the direct monetary penalties Wells Fargo paid, a $3 billion settlement with the DOJ and the SEC. U.S. Bancorp also paid a larger fine, more than $600 million, to settle allegations of anti-money laundering compliance violations as part of a deferred prosecution agreement. In a statement, Citigroup voiced its disappointment that it had “fallen short of our regulators’ expectations,” but noted that the Fed and the OCC acknowledged that the company has “begun taking corrective action and has committed to taking all necessary and appropriate steps to remedy the deficiencies.”