April 2012 Citi sanctioned for AML and being ‘deficient’ on money laundering rules – on the 6th April 2012 Citigroup has been accused of failing to comply with rules intended to stop money laundering and the financing of international terrorism.

The Office of the Comptroller of the Currency, which oversees large US banks, said that America’s third-largest bank by assets failed to identify “systemic deficiencies” in its anti-money laundering programmes that were eventually caught by bank regulators.

The agency also said that Citi allegedly failed to conduct due diligence on its foreign customers, had inadequate controls and was unable to monitor its client relationships bank-wide.

Citi, for example, was cited for failing to adequately monitor so-called “remote deposit capture” systems. Such initiatives allow bank customers, including foreign banks, to deposit paper cheques via digital scans that are transmitted electronically.

The lender neither admitted nor denied the allegations. The OCC did not cite specific instances of wrongdoing. The regulator also did not fine Citi, though it said it reserved the right to do so.

In a statement, Citigroup said many of the alleged failures cited by the OCC had either already been corrected or were being addressed.

Citi agreed to provide the OCC with a plan outlining how it would achieve compliance with anti-money laundering rules. The bank also agreed to provide regular reports to regulators detailing its progress.

Just one of many

Citi is just the latest bank to run afoul of US rules aimed at disrupting money laundering and terrorist financing activities that were strengthened after the September 11 attacks.

In 2010, Wachovia Bank entered into a deferred criminal prosecution agreement with the US Department of Justice and was fined $160m for allegedly allowing cocaine cartels to launder their proceeds through the bank.

HSBC was cited by bank regulators in 2010 for violations of anti-money laundering rules, though the OCC noted that HSBC’s allegedly ineffective compliance programme had “significant potential for unreported money laundering or terrorist financing”. HSBC neither admitted nor denied the OCC’s claims.

HSBC is under investigation by a collection of US agencies including federal prosecutors and a special US Senate investigative panel for its compliance with anti-money laundering laws and economic sanctions launched by the US that typically target individuals and countries involved in drug trafficking and terrorism, according to a February 27 filing with the US Securities and Exchange Commission.