Fed Asks Citigroup (C) to Improve Money Laundering Controls

Shares of Citigroup Inc. (C) closed up +0.34 or +0.76 percent to $44.83 per share on Tuesday, after news that the Federal Reserve had ordered the company to improve its policing methods for money laundering. In a consent order dated March 21st and made public on Tuesday, the Fed asked Citigroup's board to submit a plan within sixty days for the improvement of oversight on the company's anti-money laundering compliance.

In more recent news, Citigroup is considering reducing its cash on hand by approximately $35 billion. The move will reduce the bank's pool of liquid assets by ten percent, but would increase the company's liquidity by ten percent more than regulators are expected to demand under the new Basel III international rules covering bank's liquidity coverage ratio. Daily Chart
Manhattan, New York based Citigroup Inc. is the third largest bank holding company in the United States and a major multinational financial services corporation. The company was formed after the 1998 merger between Citicorp and Travelers Group. The company's financial network - the world's largest - spans 140 countries with 16,000 offices and over 260,000 employees worldwide. The Fed's enforcement action against the bank did not include a fine and follows concerns voiced by the FDIC and the Comptroller of the Currency on activities at two Citi subsidiaries: Banamex USA and Citibank NA. In the order asking for improved compliance, the Fed stated "Citigroup lacked effective systems of governance and internal controls to adequately oversee the activities of the banks with respect to legal, compliance, and reputational risk related to the banks' respective BSA/AML compliance programs." Citigroup responded to the Fed's order stating "Citi has made substantial progress in strengthening its BSA/AML Compliance Program and addressing legacy AML risks in a comprehensive manner across products, business lines, and geographies. The issues raised by the FRB are based on the findings by the OCC and FDIC/CDFI last year. Citi continues to take the appropriate steps to address remaining requirements and build a strong and sustainable program." Citigroup's consumer and commercial subsidiary, Citibank is currently complying with a consent order with the Office of the U.S. Comptroller of the Currency made in April of 2012 to take care of problems the bank had with the Bank Secrecy Act, which requires banks to report suspicious activity. In addition to the consent order in April, the FDIC and the California Department of Financial Institutions ordered that the bank's Mexican subsidiary, Banamex USA to address problems the company was having with its compliance program. In December, another large bank, HSBC Holdings Plc (HBC) agreed to make a record payment of $1.9 billion to settle charges that the bank failed to detect the flow of drug money from Mexico to the United States using the bank as an intermediary. Citigroup stock is up about 12 percent so far this year. The company's move to cut cash on hand by $35 billion, could add as much as two percent to company profits. The bank recently passed the Federal Reserve's stress tests and may finally be operating with more confidence after the three bailouts the company has received since the 2008 financial crisis. Other News About C Citigroup Awards Corbat $11.5 Million After Pandit Pay Rejection Citigroup gives new CEO handsome compensation deal. Analyst: Citigroup Shares Poised for Gains Amid U.S. Recovery Deutsche Bank analyst reiterates buy recomendation. Other Stocks in the News Electronic Arts Blurs The Line Between Hollywood And Games With Battlefield 4 Next generation video games promise to deliver. Is the Dell Stub the Right Investment for You?: Real M&A Article examining the Dell deal and how it could affect stockholders. Copyright 2013 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.

Published on Mar 27, 2013
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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