MJP –
Due to Citigroup’s continuous violations of a Federal Reserve regulation, the company has now experienced liquidity reporting problems in its most recent crisis.
Reuters obtained a December document from Citigroup that revealed the company’s serial violations of a rule imposed by the US Federal Reserve that restricts transactions between companies. As a result, the company’s internal liquidity reporting was inaccurate.
For the first time, the violations have been reported by Reuters.
The so-called “Regulation W” mandates that financial institutions limit certain types of activities, including loans, to their affiliates.
According to the source, the regulation is put in place to safeguard the funds of depositors whose funds are insured by the government up to a limit of $250,000.
It would appear that Citigroup is attempting to fix more than only the Regulation W violations with its risk management and internal control systems.
Risk management at Citigroup was considered “unsafe and unsound” by authorities in 2020.
The banking institution was subsequently censured by authorities in 2023 for how it assessed counterparty risk.
In 2024, authorities have maintained their criticism of Citigroup, concentrating on problems with the bank’s resolution strategy.
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Citigroup has thus far been fined $136 million for its inability to demonstrate adequate improvement in regulatory compliance.
Citigroup appears to be dealing with serious issues with its risk management, internal controls, and compliance with regulations.
As the bank continues to battle to fix these fundamental governance and operational issues, it has been the target of several regulatory measures, the most recent of which being the Regulation W violations.
The document gives a picture of Citi’s work on regulatory issues as of the end of 2023 and states that the firm’s “subsequent reaction to the breaches resulted in liquidity reporting inaccuracies “.
The bank has a robust Regulation W structure to quickly identify, escalate, and resolve problems, and they are dedicated to following all rules and regulations, according to a bank representative.
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