According to a report by the Financial Times on Friday, February 28, the American multinational investment bank Citigroup made an error by mistakenly depositing $810,000 into a client’s account when the actual amount should have been $280. It took several hours to correct this mistake.
This incident occurred in April of last year when the employee responsible for processing payments initially did not notice the error. It was then approved by a second employee in charge of verifying the transaction, leading to the transaction being officially processed the next day. Approximately 1.5 hours later, a third employee discovered the mistake, and the transaction was successfully reversed a few hours later.
Despite the operational error, the funds did not actually leave Citibank. The bank categorized this incident as a “near miss” and reported it to the Federal Reserve and the Office of the Comptroller of the Currency (OCC) in the United States.
A “near miss” refers to a case where a bank processes an incorrect amount but successfully recovers the funds. Such errors typically do not need to be reported to regulatory authorities, leading to a lack of public data in the financial industry to measure their frequency.
In an email statement to Reuters, Citibank mentioned that its internal “detection control system” promptly identified the accounting error and revoked the mistaken transaction. The bank emphasized that this incident did not have any impact on either the bank or its customers.
In recent years, Citibank has faced penalties from regulatory authorities due to risk management and data governance issues. Internal reports revealed that the bank experienced 10 near miss incidents exceeding $1 billion last year, a decrease from the previous year’s 13 incidents.
Chief Financial Officer Mark Mason stated in January of this year that the bank is increasing investments to address compliance issues and enhance data and technological infrastructure to ensure the accuracy of regulatory reports.
In 2020, Citigroup was fined $400 million for risk and data management issues, and in July of last year, it received a $136 million fine for inadequate progress in remediation.