Citigroup made a costly error but quickly reversed course after accidentally crediting a customer’s account with $81 trillion instead of $280. The mishap occurred last April and was initially overlooked by two employees. However, another employee discovered the error 90 minutes after the payment was processed.
Citi clarified that a payment of that magnitude could not have actually been executed and would have been stopped before any funds left the bank. The bank managed to reverse the transaction within a few hours. The mistake is the latest in a series of glitches at the bank.
In 2022, a Citi employee accidentally added a zero to a trade, igniting a sell-off that at one point erased 300 billion euros, or about $322 billion, from European stocks. Last year, British regulators fined Citi 62 million pounds, about $78 million, for the incident.
Citi error highlights need for vigilance
In 2020, Citigroup mistakenly sent $900 million to a group of lenders amid a dispute with Revlon, the beauty company. That year, U.S. regulators criticized the bank, saying it had failed to address issues in its risk management procedures and internal controls. Citi’s ongoing problems with technology and internal systems contributed to the departure of its former chief executive in 2021.
Jane Fraser, who succeeded him, has said improving risk and controls is a priority, but regulators expressed dissatisfaction last year with the bank’s progress in fixing its data-management issues. Citi said in a statement that its systems prevented the massive transfer from actually being made. “Despite the fact that a payment of this size could not actually have been executed, our detective controls promptly identified the inputting error between two Citi ledger accounts and we reversed the entry,” the company said.
This incident highlights the importance of vigilance in financial operations to prevent such significant errors from occurring. It also underscores the critical need for increased automation and stringent error-detection mechanisms in banking operations.
Photo by; Declan Sun on Unsplash