The Federal Reserve Board of Governors has terminated another enforcement action against Citigroup .
Less than a year after ending a regulatory order related to Citi's foreign exchange trading desk, the Fed said Tuesday that it recently lifted an 11-year-old order related to certain "deficiencies" in the firm's Bank Secrecy Act and anti-money-laundering compliance programs.
The Fed's 2013 order required Citi to take several steps to improve those programs. The central bank said at that time that Citi "lacked effective systems of governance and internal controls to adequately oversee the activities" of its Citibank and Banamex USA subsidiaries with respect to legal, compliance and reputational risk. Banamex USA was a California state-chartered commercial bank that Citi later shut down.
The Fed did not comment Tuesday on its decision to terminate the 2013 order. The agency typically lifts orders after a company has sufficiently remediated the issues identified in such orders.
Citi declined to comment on the matter.
The Fed's 2013 order required Citigroup to enhance board oversight of its firm-wide compliance risk management program, and to continue to improve the program's governance, structure, and operations.
It came a year after Banamex USA was warned by regulators that it needed to improve its Bank Secrecy Act and anti-money-laundering systems as part of a consent order with the Federal Deposit Insurance Corp. and the California Department of Business Oversight.
Another FDIC consent order related to Banamex USA followed in 2015. And two years later, Banamex USA agreed to pay $97.4 million to the Department of Justice over anti-money-laundering abuses tied to Mexico-bound remittances.
While the action announced Tuesday by the Fed is a positive development for Citi, the New York megabank continues to work on meeting the requirements of a pair of consent orders from the fall of 2020. Those enforcement actions — one each from the Fed and the Office of the Comptroller of the Currency — involved problems with the bank's compliance risk management and internal control systems.
Citi CEO Jane Fraser has said that addressing the 2020 consent orders is the bank's top priority. The compliance efforts have run alongside Fraser's broad overhaul of Citi, which aims to simplify the company and improve its profitability.
There have been setbacks. In July, Citi received a combined $136 million in surprise fines from the Fed and the OCC after the regulators determined it wasn't moving quickly enough to meet certain milestones in the years-old remediation plan crafted in response to the 2020 orders.
The OCC required Citi to file a board-approved plan by mid-August, outlining a process by which it will determine if the bank is focusing enough resources on fixing risk management and internal controls systems. In a separate order, the Fed warned that Citi faces "additional penalties or additional affirmative corrective actions" if there is a "material failure to remediate the violations."
The Fed's latest action marks the third enforcement against Citi to be lifted in the last two years. In addition to the foreign exchange trading desk-related order, the OCC in 2022 terminated a decade-old consent order that also related to anti-money-laundering controls.
