Cease-and-desist order issued to Citibank

The Office of the Comptroller of the Currency served Citibank with a cease-and-desist order on Thursday, alleging that the bank violated financial regulations and inadequately complied with the Bank Secrecy Act.

Under the Bank Secrecy Act, financial institutions are required to assist federal law enforcement with the detection of money laundering operations as well as the implementation of systems to prevent money laundering, eCreditDaily reports.

According to the OCC’s cease-and-desist order, Citibank has “internal control weaknesses including the incomplete identification of high-risk customers in multiple areas of the bank” and the “inability to assess and monitor client relationships on a bank-wide basis,” according to eCreditDaily reports.

The OCC alleges that the bank, which did not deny or admit to the claims, failed to follow due diligence in monitoring foreign correspondent customers who completed remote transactions, ultimately resulting in the failure of the bank to file reports of suspicious activity in a timely manner.

Remote transactions are completed when a bank customer scans an image of a check for deposit, similar to JPMorgan Chase’s Mobile Deposit iPhone application.

The order said that the bank found that it did not properly monitor remote transactions between 2006 and 2010 and reported the finding to the OCC. The OCC cited a failed computer systems upgrade as the potential culprit in the bank’s failure to monitor and report potentially suspicious activity, according to The Wall Street Journal.

Though the OCC can impose a fine, it has not. The regulator did order Citi’s board to organize a compliance committee that would meet monthly and whose meetings must be documented. Citibank has 60 days to report how it plans to square up with compliance requirements under the Bank Secrecy Act and anti-laundering regulations.

“In recent years, we have taken significant steps and developed a comprehensive plan to address legacy [anti-money-laundering](AML) issues and better manage AML risks comprehensively across products, businesses and geographies,” Citibank said in a statement on Thursday, according to The Wall Street Journal. “Because of these actions, many of the issues highlighted in the OCC’s Order have already been remediated or are in the process of being remediated. Furthermore, we are developing a plan to address the remaining OCC requirements.”

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